Can't get home equity loan with tax lien.

[Anonymous]

I'm in the process of having a house transferred into my name from an inheritance. It is a bit of a process and it won't be in my name right away but I went to my bank today to ask about a home equity loan to pay off all some back tax money. I owe just under $15,000. The lady I spoke with told me I can't get a home-equity loan even though the house will be 100% paid off because of the tax lien. That lien shows up only on Experian. I spoke with the Mass DOR tonight about getting the lien removed. They can't remove it until it is paid completely. Although I wouldn't be able to borrow it yet anyways because as I said the house is not yet in my name I don't understand how I can't get that loan? How is it that I borrowed $18,000 with a 2010 Honda Accord as collateral but a $350,000 house and I can't borrow 15,000? I am not planning on applying for any credit for a long time but this is the one thing I will make an exception for. I should have the house in the next six months. Does anyone know any other lenders or any other types of loans I could take with that house as collateral? Regardless of my tax lien?

[09Lexie]

---

@Anonymous wrote:

I'm in the process of having a house transferred into my name from an inheritance. It is a bit of a process and it won't be in my name right away but I went to my bank today to ask about a home equity loan to pay off all some back tax money. I owe just under $15,000. The lady I spoke with told me I can't get a home-equity loan even though the house will be 100% paid off because of the tax lien. That lien shows up only on Experian. I spoke with the Mass DOR tonight about getting the lien removed. They can't remove it until it is paid completely. Although I wouldn't be able to borrow it yet anyways because as I said the house is not yet in my name I don't understand how I can't get that loan? How is it that I borrowed $18,000 with a 2010 Honda Accord as collateral but a $350,000 house and I can't borrow 15,000? I am not planning on applying for any credit for a long time but this is the one thing I will make an exception for. I should have the house in the next six months. Does anyone know any other lenders or any other types of loans I could take with that house as collateral? Regardless of my tax lien?

---

As long as the lien is present, the IRS can attach the property.  Lenders will not place a mortgage if their is a lien on your credit report/public record.  I would suggest, googling 'withdrawing a tax lien'

[Anonymous]

In my case it's a state tax lien. Same thing though I know they can attach to the property too. But I am trying to make it a stipulation that that money gets paid off. So I pay the tax lien with the home equity loan and the lien would be removed. But I can't remove the lien without the money and I can't get the money without the lien removed.

[Anonymous]

Is there a reason you are averse to just selling the property outright, paying the lien and then putting the balance back into another property (to avoid a tax liability)?

[Anonymous]

I can't do that. The house is actually in our family. My father still lives in it. One of the reasons he put it in my name now was so that I could borrow and pay my lien. And in case he ever goes into a nursing home down the road. So its legally mine. But it's really still my dads.
I actually just took a loan from prosper and paid my back tax money today. They told me it would take a week before the lien is  released.

[Anonymous]

I hope the transfer was via a living will or something similar, otherwise a straight transfer would be a taxable event...

[Anonymous]

I'm not sure. My grandfather put it in my father's name but my father wasn't able to put it in my name until he pass due to some time and see clause he had. Once he passed my father put it in my name. I'm not sure exactly what a living will is. It's still in the process of going into my name.

[coterotie]

If the property passed directly to you from your grandfather's estate it is a non-taxable event to you.  This is your best case scenario.

However, if the property passed to your Dad who then gifted it to you, then it is a taxable event to you. 

Additionally, there is a 5 year look back rule for transfers for Medicaid.  So if the transfer were made to avoid the asset being counted prior to your dad's entry into a nursing home, then the state would have the right to seize the home to pay for the nursing home care.  That is unless you took the care to set up the appropriate trust or you lived in the home and provided care to your dad that would have delayed his entry into the nursing home by two years.  (the required residency period)

Bottom line, better make sure all the transfers were done correctly as you don't want to end up with a $350,000 tax bill, plus a big state lien for nursing home care.

---

@Anonymous wrote:
I'm not sure. My grandfather and my father's name but my father wasn't able to put it in my name until he pass due to some time and see clause he had. Once he passed my father put it in my name. I'm not sure exactly what a living will is. It's still in the process of going into my name.

---

[masscredit]

---

@Anonymous wrote:

I can't do that. The house is actually in our family. My father still lives in it. One of the reasons he put it in my name now was so that I could borrow and pay my lien. And in case he ever goes into a nursing home down the road. So its legally mine. But it's really still my dads.
I actually just took a loan from prosper and paid my back tax money today. They told me it would take a week before the lien is  released.

---

Sounds like you were able to save some money if you paid those taxes off by Oct 31st. That was the last day of the state's Tax Amnesty program.  

Please post what happens from here. I paid off all of my MA state taxes during that program and am trying to get two liens removed from my credit reports. The person that was handling my file told me that they mark the liens as paid but they don't remove them from the reports. I told her that I would do some leg work and try to make it happen. She said she could provide me with a letter stating that liens were satisifed but that's it. I'll post anything that I find in this thread.  Maybe one of us will come up with something to get these off of our reports.

[masscredit]

This info might help both of us -

A taxpayer that wants to obtain a full release of a lien must pay the amount shown on the lien plus any additional interest and penalties accrued to the date of payment. If the taxpayer wants an immediate release of the lien, payment must be made by bank check, personal money order, certified check or attorney's Client Fund check. If payment is made with a personal check, the lien will ordinarily not be released until 30 days after the date the payment is credited to the taxpayer's DOR account. If the taxpayer requests an earlier release, a copy of the cancelled check must accompany the request. This delay is necessary to assure that the check has been honored.

Once payment has been received, the Department of Revenue will make every effort to release tax liens by notifying the agencies where they have been recorded. If the taxpayer finds that the lien has not been released, he or she may request a release by contacting:

Chief, Collections Bureau
Massachusetts Department of Revenue
P.O. Box 7021
Boston, MA 02204

For further information, call (617) 887-6400.

The Department of Revenue will record all releases of Massachusetts tax liens unless written instructions to the contrary from the taxpayer are received by the Collections Bureau Chief.

http://www.mass.gov/dor/businesses/help-and-resources/legal-library/administrative-procedures/ap-631...

And then I found this. It's about IRS liens which doesn't sound to promising -

Dear Experian,

I have a tax lien release from the IRS. I was going to send it to all bureaus until I read that the credit bureaus get tax lien information automatically from the courts. Does the IRS usually update the bureaus? If not, how and when do you pick up that information?

- HMS

Dear HMS,

Experian does collect tax lien information from the courts and would get an update on a federal tax lien from the Internal Revenue Services, as well.

You don’t have to do anything to have the status of the lien updated to show that it is released. It should be updated automatically within a relatively short time. However, if you need the update to be added immediately or find that it has not been received for our automatic update, you can send the tax lien release information yourself directly to Experian and each of the other two national credit reporting companies.

The first step is to get a copy of your personal credit to verify whether or not the status of the lien has been updated. If it has not, you can dispute the status stating that it should indicate the lien was released. You can do all of this easily and quickly online.

At that time you will receive instructions to mail documentation verifying the lien was released. With those documents, Experian should be able to update the status of the lien.

The lien will not be removed, however. Rather, the entry will show that the lien was paid and released. The tax lien will remain for seven years from the paid date.

Thanks for asking.

http://www.experian.com/blogs/ask-experian/2009/08/05/updating-your-report-when-a-tax-lien-is-releas...

So, I'm wondering if there is much of a benefit having paid tax liens on your CRs?  I was denied for a credit card because of one of my liens last year. They would have given it to me if I could have showed that it was paid. It's about $14k and won't be paid anytime soon. Some banks might let it slide if you can show that it's been paid it scores are still taking a hit because of it. Anyone have experience with this?