Home Buying in 30341>Question Details

gpawf, Home Buyer in Whittier, CA

My wife and I have an IRS Tax Lien. No one will work with us on a home loan (first time).

Asked by gpawf, Whittier, CA Mon Mar 4, 2013

Were looking to buy a home, and our credit is up to the point where we can qualify, but the IRS tax lien is obviously the deal breaker for the lenders. Publication 785 (IRS provision/rule/etc), is obviously a joke, and only meant to give the IRS the cover to say, they give folks a way out.

Is there anyone that knows how to work with/around/through an IRS tax lien, so we can purchase our first home, before we reach retirement age?

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Answers

10
Props to Rodney for posting another well reasoned, helpful answer.

You sound pretty steamed about this. You also did not say whether this is a legitimate debt or a case of mistaken identity. Assuming it is your debt, and even if it is not, unless you want a lengthy fight, contact the IRS and deal with this head on. Get your fact and documentation in order, be calm, polite, and pick up the phone.

And remember that thing our mothers used to say about a spoon full of sugar, or honey, or whatever it was, it goes triple for government officials. Who ever you get at the IRS, they did not cause your problem, but they can sure make it worse. Go in with the right attitude, and they might just help you solve your poblem.

Best,

Dave Herren
Best Atlanta Properties
404-425-4945
1 vote Thank Flag Link Tue Mar 5, 2013
An outstanding lien of any type impacts the title position of a mortgage. This means that the lien would have to be paid in full prior to closing on any mortgage. Otherwise, the mortgage would be in a 2nd lien position and that is not allowed since all mortgages must be in a 1st lien position.

Contacting the IRS and setting up a re-payment plan is your first step. The IRS may agree to a subordination of an IRS tax lien that is in a repaymetn plan if the borrower uses FHA financing. I had one a couple of weeks ago where the borrowers contacted the IRS and were told that they would not agree to a subordination.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
1 vote Thank Flag Link Tue Mar 5, 2013
Agree with the answers below. Find a good attorney that specializes in tax liens and find out if it is something that you can actually fight or not. If not you're going to have to resolve it. I have heard of people negotiating their balances by having the IRS reduce the interest and fees that they keep adding on. I have never heard of the IRS reducing the original balance unless there was an error in the beginning or pretty significant circumstances.

After you get it resolved is the time to go out looking at homes. The IRS lien will never follow up so get it taken care of so you can acutally move on! Good luck!
1 vote Thank Flag Link Mon Mar 4, 2013
You and you Wife can buy a home with a tax lien. If you are making payments on the lien and have been current for at least one year. You can get loan, a FHA loan as well. You have to talk to your lender about getting it rated. Meaning, get the IRS to confirm it has been current and the lender should know what to do from there.
0 votes Thank Flag Link Thu Jan 2, 2014
I have a 30k tax lien from 2007 federal taxes and have been pre-qualified for an FHA. The lender will need to tell the title company they are "accepting the title subject to the lien". I have an established payment plan which I believe FHA requires a history of at least 3 months payments.

In terms of IRS subordination, that is not required per the IRS web site. The specific excerpt is included below as is a direct link to the IRS source.

Here is the excerpt:

Is it necessary for the Internal Revenue Service to issue
a certificate of subordination giving the security interest
priority over the NFTL?
It is not necessary for the Internal Revenue Service
to issue a certificate of subordination in order for the
lender’s PMM or PMSI to have priority over the lien.

The direct link to this document on the IRS website is:
http://www.irs.gov/pub/irs-pdf/p785.pdf
0 votes Thank Flag Link Thu Jan 2, 2014
Can you share the company in which you got your pre-qualified status from? We have been searching and can not find one. We keep getting the some run around about the Pub. 785 from the IRS.
Thank You,
Flag Tue Apr 22, 2014
I agree with Rodney, he is correct, the lien with the IRS will attach itself to "the collateral/title" of real property. Therefore, there are not any lenders, banks, that I am aware of that will allow this to be a matter of record at the same time trying to buy a home.

Thank you for the opportunity,

Lynel Adams
Sr. Mortgage Loan Officer
Silverton Mortgage Specialist
NMLS 359696
770-318-6740
0 votes Thank Flag Link Wed Mar 6, 2013
Fight it or Pay it. but either way don't waste your time on home shoping until you have this rectified.
did you know that IRS leins average 25% interest a year?
They can't be written off with a Bankruptcy.
Can enforce Wage Garnishment and even prison.
even those who go to jail are not forgiven the debt.
The IRS is no one to mess with. unless you can prove it in court, your best bet is to start paying it asap. dedicate any tax refunds, bonuses, ect... to paying it off asap.
Again 25% interest.
10k = 12,500 by the end of the year

Good luck
0 votes Thank Flag Link Mon Mar 4, 2013
There is sadly no way AROUND an IRS lien. It has to be dealt with head on. You will need an attorney who specializng in tax law.

You will most likely not be able to secure a mortgage loan with an IRS lien.

Best of Luck to you

Kawain Payne, Realtor
0 votes Thank Flag Link Mon Mar 4, 2013
You should consult an attorney specializing in IRS issues. Don't go cheap. Hire someone good. Till IRS is satisfied, any equity you put into a house belongs to IRS and that does not make your lender feel you have any skin in the game. If you have money for a down payment consider an offer in compromise. This is not going to go away!


Bruce Ailion,
RE/MAX Greater Atlanta
An Atlanta Real Estate Expert Serving Clients Since 1979
RE/MAX Hall of Fame – REALTOR Phoenix Award
CRS, CRB, ABR, MSRE, CDPE, e-PRO, ESQ
Certified Residential Specialist
Certified Real Estate Broker
Accredited Buyers Agent
MS Real Estate and Urban Affairs
Certified Distressed Property Expert
Certified Internet Professional
203K Certified Specialist
Attorney
2050 Roswell Road
Marietta GA 30062
404-978-2281 Direct
404-386-3682 Assistant Robin
678-760-6266 Buyer’s Agent Adam
770-973-9700 Office
bruce@locationlocationlocation.com
http://www.LocationLocationLocation.com
0 votes Thank Flag Link Mon Mar 4, 2013
Sorry, unfortuantely no one will give you a loan with a tax lien. You are going to have to work that out first. No bank is giving you a loan with a debt that can be tied to their property. Banks will even have buyers pay some debt/collections off.

Work on getting your lien down and set up a payment plan to pay it off. Also, work on saving some money for your down payment while you wait for your lien to be paid off.

Good luck

Cheryl Taylor
Solid Source Realty
404-644-8082
0 votes Thank Flag Link Mon Mar 4, 2013
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