cancel
Showing results for 
Search instead for 
Did you mean: 

Mortgage with tax liens (no payment plan)?

tag
masscredit
Valued Contributor

Mortgage with tax liens (no payment plan)?

I'm doing something that I never thought I would do again... possibly buy a house. I'm exploring my options and then decide.  I have a BK that was discharged in Feb of '10. I had 5 tax liens (3 federal and 2 state). I took advantage of my state's tax amnesty program the end of last year and paid off the two so I just have the IRS liens. They total about $16-$17k.  Ideally, I'd like to just let them reach their collection statue expiration date (CSED).  The big one is about $13,500. The CSED is in November of '18. The next one won't be collectable after September of '19 and the final after May of '21.  I'm tempted to just pay that one off. It's only about $400.00. 

 

What are my chances of getting a mortgage with those liens?  I spoke with my credit union today. That question was forwarded to underwritting to see what they say. I know liens can attach to property so that can be an issue. Banks don't like to see that,

 

Another option for me is to take advanage of the IRS's Fresh Start Program (http://www.irs.gov/uac/Newsroom/IRS-Fresh-Start-Program-Helps-Taxpayers-Who-Owe-the-IRS). Either set up a payment plan for the full amount or (the preferred way), do an offer in compromise to have the amount reduced. Then set up a payment plan and file to have the liens withdrawn. Then I'll be clean of all liens.

 

I did some research here before posting. Most people are already in a payment plan.

 

Suggestions welcome! 

Pre-Credit Rebuild Scores Pre-DC (3/24/22) - EQ - 524 / TU - 519 / EX - 495

Current Scores - EQ - 687 / TU - 663/ EX - 677

SDFCU Secured - $5000 / TD Bank - $5000 / Mercury - $5000 / Capital One Savor One- $5000 / Capital One QuickSiver - $4500 / Ally Master Card - $2800/ Walmart Mastercard - $2250

Andrews FCU SSL $1500
Message 1 of 15
14 REPLIES 14
Glenn_S
Contributor

Re: Mortgage with tax liens (no payment plan)?

You won't get a mortgage with a lien, because they government can then attach the lien to the house in the first position ahead of the mortgage holder.

 

Contrary to what you hear on the radio and see on TV, VERY FEW ever get their taxes reduced with an offer in compromise. You need to be found insolvent to make it happen. You are better off entering into a payment plan and then you can have the lien withdrawn. Your payments then are simply counted against your DTI.

 

Don't beleive the sharks that try and sell you tax services, as they only look out for themselves. I know and was burned. I ended up worse off than if I had just set up a plan.

 

Call them. They are really quite easy to work with.


Starting Score: 617 on 1/2009
March 2015 Scores (Lender Pulled-Mortgage): TU: 733, EQ: 719 EX: 789
MyFico Score August 2023: 845;


Take the FICO Fitness Challenge
Message 2 of 15
Lemmus
Established Contributor

Re: Mortgage with tax liens (no payment plan)?

...my CSED expired in '13 and the CSRs immediately deleted the lien ...no one would touch me for any kind of credit before it was gone ...it was for a much larger amount than yours and a payment plan or settlement were not options for me ...in the ensuing 20+ months my scores have gone from the 400s to 750s+.

 

...as long as the liens exist and you're not in a payment plan, they can reach out and zero any bank accounts you have, seize any property with your name on it, and garnish any income source whatsoever ...and trust me, they will ...that tends to somewhat discourage lenders

 

...once in a payment plan, if you default, it would reset your CSED to the new date ...thats the way the IRS plays the game ...consider that when dealing with them ,,,and get everything in writing signed by someone with the authority to commit them ...in my experience, they write their own rules, have their own courts, routinely ignore their own commitments, and have the collective morals of a snake (my apologies to snakes)

 

...that said, if you do go the payment route, I'd think a mortgage would depend on how much any payment plans would affect your DITR

 

...good luck in whatever you choose


Helpful Links: Do I Qualify? | Mortgage Calculator | USDA Mortgages | Opt Out | FICO Versions
Last HP: 11/04/15 | myFico 3B Jun 10 '15:FICO8 EQ - 752 | TU - 763 | EX - 750
Message 3 of 15
frugalQ
Valued Contributor

Re: Mortgage with tax liens (no payment plan)?

Even if you didn't pay it and it fell off your credit report, wouldn't the lien show up when they do a title search?
AmEx Green NPSL | Amex BCP 16K | Citi Simplicity 10k | Discover IT 9K | Chase Slate 7.5K | Amex Hilton HHonors Surpass 7K | Capital One QuickSilver 6K | Home Depot 5k | Chase Freedom 4.5K | LOC 2.5K
Message 4 of 15
Glenn_S
Contributor

Re: Mortgage with tax liens (no payment plan)?

Unpaid liens remain on your credit report indefinately. Paid liens will fall off after 7 years from the date they have been satisfied, unless you have the lien withdrawn.

 

 


Starting Score: 617 on 1/2009
March 2015 Scores (Lender Pulled-Mortgage): TU: 733, EQ: 719 EX: 789
MyFico Score August 2023: 845;


Take the FICO Fitness Challenge
Message 5 of 15
Lemmus
Established Contributor

Re: Mortgage with tax liens (no payment plan)?


@frugalQ wrote:
Even if you didn't pay it and it fell off your credit report, wouldn't the lien show up when they do a title search?

...by law, an IRS lien closes automatically ten years after filing date if it has not been paid ...the lien AND the debt are no longer valid and the IRS cannot pursue it further ...it ceases to exist ...one of the VERY few legislative actions that theIRS has not managed to worm its way around ..note however that ANY Offer in Compromise or payment negotiation act by the debtor can extend and even restart the CSED ...hth

http://www.irs.gov/irm/part5/irm_05-001-019.html#d0e436


Helpful Links: Do I Qualify? | Mortgage Calculator | USDA Mortgages | Opt Out | FICO Versions
Last HP: 11/04/15 | myFico 3B Jun 10 '15:FICO8 EQ - 752 | TU - 763 | EX - 750
Message 6 of 15
Revelate
Moderator Emeritus

Re: Mortgage with tax liens (no payment plan)?


@Lemmus wrote:

...my CSED expired in '13 and the CSRs immediately deleted the lien ...no one would touch me for any kind of credit before it was gone ...it was for a much larger amount than yours and a payment plan or settlement were not options for me ...in the ensuing 20+ months my scores have gone from the 400s to 750s+.

 

...as long as the liens exist and you're not in a payment plan, they can reach out and zero any bank accounts you have, seize any property with your name on it, and garnish any income source whatsoever ...and trust me, they will ...that tends to somewhat discourage lenders

 

...once in a payment plan, if you default, it would reset your CSED to the new date ...thats the way the IRS plays the game ...consider that when dealing with them ,,,and get everything in writing signed by someone with the authority to commit them ...in my experience, they write their own rules, have their own courts, routinely ignore their own commitments, and have the collective morals of a snake (my apologies to snakes)

 

...that said, if you do go the payment route, I'd think a mortgage would depend on how much any payment plans would affect your DITR

 

...good luck in whatever you choose


While I agree with some of your sentiment, this isn't the case.

 

Mortgages you're absolutely right, credit in general?  Not the case, not even close actually with my own Federal albatross reporting and my establishing credit with virtually every major credit issuer other than Citi.  Also 400 to 700?  Color me skeptical, I'm at nearly 700 with a lien still on my reports, and paid vs. unpaid makes no difference.  I was above a 700 on my FICO 8 scores even with the old albatross still reporting.

 

It's also not as easy for the IRS to find your bank account as you state; if it's not generating any interest (or less than the amount that the bank is required to generate a 1099) the odds of they're finding it are frankly pretty low unless you tell them about it, and even then there's no law against your switching bank accounts the next day.  A bare bones checking account with BOFA or Chase or similar is effectively the 21st century equivalent of stuffing money into a mattress.

 

Brokerage account or anything that generates a 1099, yup, snatcheroo.

 

Anyway liens suck absolutely, but it's not a death sentence from a credit perspective... but for a mortgage, an unpaid open non-payment-plan lien, you're absolutely right; forget about it.




        
Message 7 of 15
Lemmus
Established Contributor

Re: Mortgage with tax liens (no payment plan)?


@Revelate wrote:

@Lemmus wrote:

...my CSED expired in '13 and the CSRs immediately deleted the lien ...no one would touch me for any kind of credit before it was gone ...it was for a much larger amount than yours and a payment plan or settlement were not options for me ...in the ensuing 20+ months my scores have gone from the 400s to 750s+.

 

...as long as the liens exist and you're not in a payment plan, they can reach out and zero any bank accounts you have, seize any property with your name on it, and garnish any income source whatsoever ...and trust me, they will ...that tends to somewhat discourage lenders

 

...once in a payment plan, if you default, it would reset your CSED to the new date ...thats the way the IRS plays the game ...consider that when dealing with them ,,,and get everything in writing signed by someone with the authority to commit them ...in my experience, they write their own rules, have their own courts, routinely ignore their own commitments, and have the collective morals of a snake (my apologies to snakes)

 

...that said, if you do go the payment route, I'd think a mortgage would depend on how much any payment plans would affect your DITR

 

...good luck in whatever you choose


While I agree with some of your sentiment, this isn't the case.

 

Mortgages you're absolutely right, credit in general?  Not the case, not even close actually with my own Federal albatross reporting and my establishing credit with virtually every major credit issuer other than Citi.  Also 400 to 700?  Color me skeptical, I'm at nearly 700 with a lien still on my reports, and paid vs. unpaid makes no difference.  I was above a 700 on my FICO 8 scores even with the old albatross still reporting. Thats because the IRS allowed you to maintain an income and a normal life ...not my experience. Over 18 years, they repeatedly seized my accounts, garnished my income, and then went after clients filing 1099s on me demanding every cent paid me ...I finally learned to stay off their radar which also means the CRAs radar ...when I tried to borrow money to get a trans fixed in early 2013, my scores were in the 400s, an unpaid med and the IRS lien were the only items reported, and the lien was specifically cited as a reason for refusal ...once the lien was gone, I followed the advice on myFico, got a BoA 99/500 card and a predatory auto loan (27%) ...as of today that BoA card has an 8K CL/low int/no fee and a CU has my auto loan at their best rate ...my TU fico 8 is 767 and my fico 4 mid is 725 ...I have 5 prime cards with good CLs and don't even read the CC solicitations any more ...be as sceptical as you like but I had a relatively easy file to clean up once the lien was gone and didn't have to fight a lot of negs (even though some showed up after I started looking for credit) ...again, my situation differs significantly from yours but there is no reason for any scepticism on your part ...read my past posts if you want, its all there

 

It's also not as easy for the IRS to find your bank account as you state; if it's not generating any interest (or less than the amount that the bank is required to generate a 1099) the odds of they're finding it are frankly pretty low unless you tell them about it, and even then there's no law against your switching bank accounts the next day.  A bare bones checking account with BOFA or Chase or similar is effectively the 21st century equivalent of stuffing money into a mattress. Since the Patriot Act its virtually impossible for any US citizen to open a new bank account without providing an SSN or TIN, interest bearing or not ...and if you claim religious exemption, the bank has to report it to the IRS on a special list. The IRS has direct/indirect access to every federal govt database, bank database, and CRA database ...they, along with the SSA, even use a CRA database to verify your idenity when accessing their systems ...the IRS can find your accounts at will ...if they don't its because your debt isn't high enough to trigger a search, you're not on a list, or their antiquated computer systems can't keep up ...after they levied me repeatedly, I opened new accounts at different banks ...they found every one ...I learned to move my direct deposit pension payment to cash immediately ...and the banks got rich off the levies by charging my account $75 for each ...plus $35 more if I failed to cover it in 3 days ...if it were not for the pension, a mattress would have made me money.

 

Brokerage account or anything that generates a 1099, yup, snatcheroo.

 

Anyway liens suck absolutely, but it's not a death sentence from a credit perspective... but for a mortgage, an unpaid open non-payment-plan lien, you're absolutely right; forget about it.


 


Helpful Links: Do I Qualify? | Mortgage Calculator | USDA Mortgages | Opt Out | FICO Versions
Last HP: 11/04/15 | myFico 3B Jun 10 '15:FICO8 EQ - 752 | TU - 763 | EX - 750
Message 8 of 15
masscredit
Valued Contributor

Re: Mortgage with tax liens (no payment plan)?

I kind of figured liens would throw a wrench into mortgage approvals. I'm kind of surprised the person that I spoke with at the credit union didn't tell me that. I spoke with someone at my accountant's office last year about doing an OIC.  He deals with tax issues and was an IRS agent for many years. He said he usually won't take on one unless he's fairly confident that it will go through. Also mentioned that they can be a lot of work. I guess the IRS wants to see tons of documents.  I guess I have some thinking to do. I'd really like the big one to age off then deal with the other two.  Would be nice to not have any though. 

 

Would an an unpaid lien that has exceeded the CSED be a reason to be declined for a mortgage? It can still hurt scores while it's on the reports but the banks wouldn't have to worry about the IRS trying to seize the property.  And the thing about any OIC or negotiation resetting the CSED... that's not good! 

 

I think Lemmus is an example of how things can be bad. My liens are currently listed as uncollectible so they don't bother me. I only keep enough money in my accounts to keep them open. Money for bills goes in one day and out that day or the next.   I don't have a lot. A relative recently passed away so the house will be for sale. It will be cheaper for me to pay a mortgage for it than it is to pay rent. That's why I'm looking into this. Maybe I can make it happen. 

Pre-Credit Rebuild Scores Pre-DC (3/24/22) - EQ - 524 / TU - 519 / EX - 495

Current Scores - EQ - 687 / TU - 663/ EX - 677

SDFCU Secured - $5000 / TD Bank - $5000 / Mercury - $5000 / Capital One Savor One- $5000 / Capital One QuickSiver - $4500 / Ally Master Card - $2800/ Walmart Mastercard - $2250

Andrews FCU SSL $1500
Message 9 of 15
ezdriver
Senior Contributor

Re: Mortgage with tax liens (no payment plan)?


@masscredit wrote:

I kind of figured liens would throw a wrench into mortgage approvals. I'm kind of surprised the person that I spoke with at the credit union didn't tell me that. I spoke with someone at my accountant's office last year about doing an OIC.  He deals with tax issues and was an IRS agent for many years. He said he usually won't take on one unless he's fairly confident that it will go through. Also mentioned that they can be a lot of work. I guess the IRS wants to see tons of documents.  I guess I have some thinking to do. I'd really like the big one to age off then deal with the other two.  Would be nice to not have any though. 

 

Would an an unpaidmlien that has exceeded the CSED be a reason to be declined for a mortgage? It can still hurt scores while it's on the reports but the banks wouldn't have to worry about the IRS trying to seize the property.  And the thing about any OIC or negotiation resetting the CSED... that's not good! 

 

I think Lemmus is an example of how things can be bad. My liens are currently listed as uncollectible so they don't bother me. I only keep enough money in my accounts to keep them open. Money for bills goes in one day and out that day or the next.   I don't have a lot. A relative recently passed away so the house will be for sale. It will be cheaper for me to pay a mortgage for it than it is to pay rent. That's why I'm looking into this. Maybe I can make it happen. 


I went to my local IRS office and told them that "I cannot pay the taxes owed". An examiner then said that she'll enter my information into her system and see what the outcome is. Voila ... the systems deems my taxes "uncollectable" and she gave me a letter stating same. The lien remained on my house but I walked away from the house and Wachovia resold it after getting the IRS to remove the lien to facilitae the reselling of that house. However, the lien remained on my credit report and it a=only died after I was able to inclde it in my ch discharge. It is almost impossible to get a total absultion/forgiveness from the IRS short of being able to include it in a ch7 discharge. Offer in compromise is mostly a theory and is super difficult to achieve.

 

Arrange a payment plan with the IRS. That is my recommendation.

 

 

Message 10 of 15
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.