Settlement check for mortgage insurance

Forum|Forum|1 year ago
December 26, 2024
5 replies
22 views

This past summer I received a check for over a thousand dollars from a former mortgage lender. Apparently over a decade ago (prior to a refi with another bank) they delayed informing customers that they no longer had to pay PMI...there was some kind of class action thing and they sent checks to compensate former account holders for PMI they paid unneccesariily plus interest......there was no info about possible tax implications enclosed.....would this be taxable income on the Federal?

guywong

Level 6

The refund equal to the amount of PMI that you had paid since the requirement was no longer required is not be taxable if you had never deducted it on your tax return. Any PMI paid that you had previously deducted would be taxable. The interest portion is taxable.

macdaddy100111Author

Level 2

So unfortunately the check and it’s accompanying documentation did not break down specifically how much was interest ….. my previous tax returns which attempted to deduct the PMI was paying at the time did not exceed the standard deduction so did not help at the time …. Should they be sending me some kind of 1099 statement on this?

Thanks for responding

guywong

Level 6

Hopefully, you will get a 1099-INT in January. You may want to contact the sender of the check to confirm that a 1099-INT is forthcoming. If the PMI paid was on your principal residence and you didn't itemize your deductions on Schedule A, then the refunded PMI is not taxable.