Handling a loan servicing change

[tjpeluso]

My mortgage was transferred to a new servicer in September, so I have two 1098s for mortgage interest for my primary loan this year. Need some guidance to ensure that I am entering my data correctly.

For the old servicer:
What do I enter for the ending mortgage balance? Do I enter the amount that was transferred to the new servicer, or do I enter $0? Or should I enter the date that the transfer was effective on, even if that technically isn't a "payoff date"?

For the new servicer:

• Box 2 is blank on the 1098 I received, but Smart Check threw an error and demanded that I enter a start-of-year mortgage principal amount. Should I enter the amount from the start of the year, or should I enter the amount at the time the new servicer received the loan? (I am guessing the latter.)
• When asked if this is the original loan I took out to purchase this property, what should my response be? I'm guessing to answer Yes because this is neither a HELOC or a refinancing situation.

[Carl]

For the old servicer: What do I enter for the ending mortgage balance?

Zero.

For the new servicer:

• Box 2 is blank on the 1098 I received, but Smart Check threw an error and demanded that I enter a start-of-year mortgage principal amount. Should I enter the amount from the start of the year, or should I enter the amount at the time the new servicer received the loan? (I am guessing the latter.)
  Enter the start amount of the old "Original" loan. That "is" what you started with, and it's not your fault or within your control the fact that the old lender sold the loan to a new lender. In other words "YOUR" starting amount on the loan is what "YOU" borrowed, regardless of who you borrowed it from originally.
• When asked if this is the original loan I took out to purchase this property, what should my response be? I'm guessing to answer Yes because this is neither a HELOC or a refinancing situation.
  Yes, it is the "original" loan you took out. Again, just because it was sold to another lender, does not change that fact that it's still "YOUR" original loan. You have no control of ownership of the loan.

[BBarney]

I've got a similar situation to resolve. First purchase mortgage and a heloc. Both loans were sold during 2018 to new lenders /servicers. Based upon the feedback above, I've "zeroed out" the ending balance of the two original loans. The problem is now that the "Average Balance" is overstated because all 4 loans have "beginning of the year balances." Intuitively, I have tried to go in to the "new" loans (for the acquiring servicers) and set the beginning of year balances to $0 (which they were at the beginning of the year). Turbotax doesn't like the "$0" balance figure and is requiring that I put some value in. Should it be $1? or $0.01?   With the "Average Loan Balance" being 2X due to loans having initial balances, the deduction is being limited unnecessarily.   How can I rectify the problem?