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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Trying to get a mortgage; tax lien appearing on credit report

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Trying to get a mortgage; tax lien appearing on credit report from 2006; IRS levied our accounts in 2007 to satisfy the tax due. Now IRS won't give a lien release and is saying more money is due. Don't have cash to pay off what they say we owe now; and are in the middle of a real estate contract. Help.
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.



If taxpayers are looking to refinance or sell a home and there is a federal tax lien filed, there are options. Taxpayers or their representatives, such as their lenders, may request that the IRS make a tax lien secondary to the lien by the lending institution that is refinancing or restructuring a loan. Taxpayers or their representatives may request that the IRS discharge its claim if the home is being sold for less than the amount of the mortgage lien under certain circumstances.


Here is a link to a page on the IRS website which gives more details and tells you how to apply for the certificate of subordination.,,id=201343,00.html


If this was helpful please press the Accept button. Positive feedback is also appreciated.


Thank youCustomer/p>



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Customer: replied 7 years ago.
We just sold our home with no issues. Our mortgage company through whom we are applying for new mortgage found the lien on our credit report. The IRS levied our bank account for 25,000.00 to satisfy the lien back in 2007. Now IRS says they are still owed $9K on it. I told them it was satisfied and I need a release. They say, pay the 9K. We are supposed to close our new mortgage. Lender won't do it with a lien. This is not a Refi. Our other home sold fine and we proceeded with a contract on a new one. Now we are stuck and can't get a mortgage even with decent credit scores. Husband is VA, also.
Expert:  Merlo replied 7 years ago.

Hello Kade,


You said you sold your other home with no issues.


So what property is it that has a lien on it?


If you already purchased a new home, I assume you had the mortgage in place prior to being able to purchase it, so I am confused here as to your exact situation?


Customer: replied 7 years ago.
We are in the middle of getting financed for the new home. 60 days ago, we were preapproved for a new mortgage. Now the lien is showing up.
Expert:  Merlo replied 7 years ago.

So is this lien against your new home?


I am still not clear on how you got in to the new home without already having an approved mortgage?



Customer: replied 7 years ago.
We did have an approved mortgage application. "Underwriting" found the lien. We are supposed to close on the new property in about 20 days. They are going to deny us lending if we don't clear it up and the new house will not close.
Expert:  Merlo replied 7 years ago.

Hello again,


Unfortuantely the only thing that the IRS would do in this case is to possibly agree to make the lien secondary to the lender as explained in the original post. Other than that option, you would need to pay off the amount that is due to the IRS, because they will not totally release the lien until this debt has been paid or until you can show otherwise that the amount is not owed.



Edited by Merlo on 12/2/2009 at 9:05 PM EST