01/27/2020: Definition for Box 2 on the 1098 Mortgage Interest Statement

Please become familiar with the definition for Box 2 “Outstanding Mortgage Principal” on the 1098 Mortgage Interest Statement.



From the irs.gov website:

Box 2. Outstanding Mortgage Principal 

Enter the amount of outstanding principal on the mortgage as of January 1, 2019. 


If you originated the mortgage in 2019, enter the mortgage principal as of the date of origination. 


If you acquired the mortgage in 2019, enter the outstanding mortgage principal as of the date of acquisition.


Specific to the 1098 Mortgage Interest Statements generated by Fairway or by ServiceMac on behalf of Fairway, some customers are inquiring about the dollar amount in Box 2.  Based on the IRS definition referenced above and the applicable loan scenario referenced below,  advise customers of the correct explanation for the dollar amount in Box 2.


 For Interim Servicing and Transferred Servicing Loans, the dollar amount in Box 2 on the statements generated by Fairway will be: 


  • The original principal balance as of the date of the loan’s origination in 2019 


OR


  • The principal balance as of January 1, 2019 if the loan originated in 2018 and funds were received and applied at Fairway in 2019 prior to the Servicing Transfer



For Retained Servicing Loans, the dollar amount in Box 2 on the statements generated by ServiceMac on behalf of Fairway will be:


  • The principal balance as of the effective date of the Servicing Transfer from Cenlar to ServiceMac, September 1, 2019 


OR


  • The original principal balance as of the date of the loan’s origination in 2019 if the loan originated on or after July 15, 2019 and boarded directly to ServiceMac (did not transfer from Cenlar or another servicer or sub-servicer)


Some Retained Servicing customers whose loans paid in full in 2019 are inquiring why the dollar amount in Box 2 is not $0.00.  

  • The dollar amount provided is correct based on IRS regulations and the applicable loan scenario referenced above
  • Do not request a corrected 1098 Statement to reflect $0.00 in Box 2 for these customers


If Retained Servicing customers who transferred from Cenlar have questions regarding the 1098 statement they received from Cenlar, please advise them to contact Cenlar directly for assistance.


Please see your Manager or Lead if you have any questions.