@ebertt wrote:
Who is responsible for reporting the 1099-MISC on their 2019 income tax my wife or the deceased previous owner?
First of all, the mortgage holder was just trying to point out the fact that your wife is not personally liable for the mortgage note. Obviously, the lender has a lien on the property and can foreclose but your wife is not personally liable for repayment (i.e., the lender's recourse is limited to the value of the property - the lender has no legal recourse against your wife).
Assuming the 1099-MISC was issued to the decedent for entire 2019 tax year, then the decedent would be technically responsible for reporting the income on a final income tax return through the date of death and then would be a nominee recipient for that part of the year after the decedent's death.
See https://www.irs.gov/instructions/i1099gi#idm140119320878080
Your wife would report rental income for that part of the 2019 tax year after the death of the decedent. The estate should not be involved since the transfer, via a TOD deed, occurred upon death by operation of law.
