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I saw your info on chat just now. I know almost nothing about taxes but you must research something called NOTICE OF INCONSISTENT POSITION (or something similar). This is critical for you especially if they are trying to forgive the entire debt of your house AND take the house. I think this is the form but I did not write down the form number, so I may be incorrect.
IRS form 8082 Notice of Inconsistent Treatment or...
Inst 8082 Instructions
There is a tax professional who gave a lecture here on 1099 issues with Fraudclosures. If you can't find anyone locally, you may wish to consult with her. I have no idea what her fee is but it might be worth it for your issue.
Luisa K Bosso, CPA in West Palm Beach, Florida