If the mortgage is on the s-corp's books, and they are issued the 1098, then they would take the expense, but they cannot use the asset, as they don't own it. The owner would put the building on his personal 1040. This is a good thing, as real property is generally not recommended to be titled in an s-corp. I am far from an expert on this subject, so do more research, and not just take my opinion.

Would the loan proceeds used for a purchase by the owner be  a distribution?

Is this actually a mortgage secured by the real estate? Or is it a business loan?

And I don't think the bank just put the loan in the business name. The owner filled out paperwork and signed it.

It's such as shame that people don't get their guidance before making these messes.

"The bank put the loan in the name of his S-Corp but filed the deed in his individual name."

I agree with sjrcpa's questions. Look at the names on the forms, such as, the Loan is signed by him, but is it as President and is it a recourse loan and is the property encumbered?

Because all of this should be personal. The business would then be leasing the property from this owner. And the owner makes these payments, not directly from the business.