Income Tax Consequences to Homeowners
The sum of all payments on the home mortgage that the homeowner actually makes during a taxable year to the mortgage servicer, HUD, or the State HFA; and
The sum of amounts shown on Form 1098 for mortgage interest received, real property taxes, and (for years 2010 through 2013 only) mortgage insurance premiums. (For Forms 1098 issued for 2010 and 2011, mortgage servicers report these amounts in Box 4 (Mortgage insurance premiums). On Form 1098 for 2012, Box 4 is unlabeled, but, pursuant to instructions, mortgage servicers should again report these amounts in Box 4.)
This safe harbor method of computing the homeowner’s deduction applies for a taxable year if (1) the homeowner meets the requirements of §§ 163 and 164 to deduct all of the mortgage interest on the loan and all of the real property taxes on the principal residence, and (2) the homeowner participates in a State Program in which the program payments could be used to pay interest on the home mortgage, or the EHLP or an SSSP
Hardest Hit Fund and Emergency Homeowners' Loan Programs
You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions.
You received assistance under:
A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or
An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state.
You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home.
"To claim the Mortgage Interest deduction, you should calculate how much interest reported by your lender that was paid by YOU for 2012. Performing the calculation will include knowing how many months of assistance you were provided, how many monthly payments you paid independently, and the monthly interest charged by your lender (this information can be found on your payment statement or mortgage history)."
This statement was included in the letter that I received from the hardest hit fund that accompanied my 1098-MA. You can only claim the mortgage interest that YOU actually paid for 2012.
I only made 2 mortgage payments for 2012. I logged into my mortgage account, navigated to my payment history and noted the amounts applied to interests for the 2 months that I paid and entered that total on my tax return. If your payment history does not separate the amount applied to interest and the principal each month than contact your lender and they can provide you with an interest total for the amount of months that you need.
I hope this helps.