My husband and I serve as the private mortgage holder for our son. How do we report the mortgage interest that we receive from him? Everything I read says that we do not need to file a 1098 if the transaction is not part of our normal line of business, but I want to report the income and want him to be able to claim the deduction. Can I file a 1098?

no;unlessyou are in the biz of lending money

In that case, is there another way to report the interest he has paid so that he can deduct it?

In that case, is there another way to report the interest he has paid so that he can deduct it?

in my opinion, no as it is treated as personal transaction; since the payee, you, DO NOT report it on your 1040 as your interest income or you DO NOT issues him 1099INT, your child, the payer, CAN NOT deduct it on his 1040 either.