topic Re: Unpaid Taxes in Mortgage Loans

Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 15:50:53 GMT

Hello,

I am in the process of purchasing a new construction home that will close mid to late september. I applied for a mortgage, and was preapproved by 2 lenders. I have unpaid taxes for 2013, 2014 and 2015. I completed 4506t for both lenders, however one lender has all boxes checked (return transcript, account transcript, record account transcript, verification of nonfiling and Form Transcript) and the other lender only has the return transcript selected. They both are for years 2018, 2017 and 2016. Will the unpaid taxes for the prior years be a factor? Not sure what to do...

Re: Unpaid Taxes

Anonymous — Wed, 19 Jun 2019 16:12:22 GMT

It will be a factor. Are you planning to go with a conventional mortgage? Are there any tax liens filed? I would suggest getting a payment plan set up with the IRS asap. For an FHA loan, you will need to have made three consecutive payments prior to closing and the monthly payment will be included in your DTI calculation. For conventional, I believe you only have to have made one payment prior to closing. If any have resulted in a tax lien, you will not be able to go with a conventional mortgage unless you can get them withdrawn.

Re: Unpaid Taxes

JVille — Wed, 19 Jun 2019 16:51:38 GMT

Agree a huge factor. In fact a declining factor if it was undisclosed and you are not in a payment plan with a Nobel winning letter of explanation. Unpaid taxes for multiple years? Federal taxes take lien priority over the lender.....
Failure to disclose and address multiple years of back past due taxes are a bit more than an issue.

Re: Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 17:06:33 GMT

No tax lien has been filed. I just got the notice last week, after adjustments were made to these years. The tax transcripts have already been received by the lender and I have received a conditional approval, just needing the appraisal completed. I want to reach out to the IRS to get on a payment plan, however I wonder if that will exclude me from closing since I only have two months from now until closing using a VA loan. And I will not have an opportunity to make multiple on-time payments before the closing date

Re: Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 17:07:34 GMT

I think you are I did not know there was going to be amounts due until last week we did file the taxes and had paid the taxes but adjustments were made due to errors and now we need to make these payments. I have been trying to contact the IRS but they keep saying to call back later or tomorrow.

Re: Unpaid Taxes

JVille — Wed, 19 Jun 2019 17:21:31 GMT

Is the amount due too large to just pay? Or get a family member to advance funds to payoff? Possibly 401k loan? Anything to clear the obligation?

Re: Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 17:29:48 GMT

Yes the amount is too large I can pay off one of the years..
I am going to a payment arrangement however I’m wondering how that is going to affect me now that we are closing in two months..once when we go into the installment agreement Irs says they will issue a lien. At this point we don’t have a lien I’m wondering if I should just wait until we close and then going to the installment agreement since the tax transcripts have already been reviewed and approved ? Or do you think they will review the tax transcripts again before closing ?

Re: Unpaid Taxes

JVille — Wed, 19 Jun 2019 17:51:42 GMT

Yes they will absolutely review Tax Transcripts.... and the repayment plan will be calculated into your DTI ratios. You need to discuss this with your Lender ASAP

Re: Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 18:01:58 GMT

I need to get a payment plan in place first... the payment will put me over DTI . I am married but my husband is not on the loan, but he is responsible for tax debt jointly. Do you think they will split the amount for dti purposes?

Re: Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 18:02:21 GMT

Thank you for your responses.

Re: Unpaid Taxes

Anonymous — Wed, 19 Jun 2019 18:17:45 GMT

You said you received notices - are the notices providing proposed changes to the prior returns to which you can still respond? The process is usually that the IRS will send a notice of proposed changes, give the tax payer and opportunity (30 days I think) to respond, and then upon review of any response, the IRS will then finalize and access any additional tax. One the additional taxes are access, you would set up the payment plan. Either way, you should discuss with your lender.

Re: Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 18:30:37 GMT

Yes I can still respond and pay the taxes. I am just trying to get in touch with the IRS as they don’t answer the phone, To make the payment arrangement. I’m just wondering if I should rock the boat with the lender since everything is already approved and they are not looking at 2015 taxes. I am getting the house in my name only and I’m wondering if I can just set up the payment plan in my husbands name since we file jointly.

Re: Unpaid Taxes

Anonymous — Wed, 19 Jun 2019 18:44:19 GMT

The IRS is difficult to deal with. I haven't found any way around that.

I'm still a little confused about the status of the additional amount owed. Did the notice say something like "Notice of Proposed Changes" or did it say "You must pay x amount"? You should read what ever it you got very carefully to determine the status and your rights. It will tell you on the face if it is a bill or not.

If you still have time to respond to the notice, figure out if you have any basis to dispute the proposed changes, and, if so, then respond back. I got a notice for a recent tax year proposing that I owed an additional $12,000, which I was able to reduce to under $1000 by researching and providing additional information. I don't think they will even allow a payment plan until the amount is acutally assessed. When they assess the additional tax, it cancels any current installment agreement. I would keep calling and ask them whether the additional taxes have been assessed and, if so, what do you actually owe today?

Re: Unpaid Taxes

AZEsq — Wed, 19 Jun 2019 18:43:49 GMT

So when they request account transcripts, it will show the balance. Even if you're not in a community property state, if you file jointly, it's your debt. If you can't clear it and it'll jack your DTI, you need to talk to your lender ASAP. If you have anything else in your name that's close to that payment amount that you husband CAN put in his name only or you can get family money to clear, I'd prepare to do that. Or try to get the IRS to accept one time payment--you could also call a tax attorney, but this takes longer than 2 months generally speaking. We had those 3 years do an adjustment on us too, but in 2017, and we've been plugging along at the payments, but our lender plainly told my husband when we talked to him about it that even we did the house in my name alone (the IRS payments come out of hubby's account only), the IRS payment is included in my DTI because it's my debt too. Sigh.

Re: Unpaid Taxes

Anonymous — Wed, 19 Jun 2019 18:46:43 GMT

Yes, there is no way to shift this to your husband. My back tax debt was allocated to my ex-husband in our divorce decree and the IRS does not care at all. If you jointly filed, you are jointly responsible for the entire amount due regardless of any agreement/court order/etc.

Re: Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 18:50:47 GMT

Thank you. They have already requested tax transcripts and reviewed them last month. At that time there was no debt. The underwriter reviewed my file issued a conditional approval. I followed up with the conditions then received a final borrower approval. Clear to close will not be issued until they have an appraisal. So are you saying they will now request more transcripts again for 15,14 and 13, prior to allowing me to close?

Re: Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 18:53:59 GMT

To clarify, the transcripts they requested and reviewed were for 18,17 and 16. This new bill is for 15,14 and 13, will the lender now request these years transcripts in additon?

Re: Unpaid Taxes

JVille — Wed, 19 Jun 2019 19:06:58 GMT

I don’t think they will.... you may slide thru!

Re: Unpaid Taxes

mortgagee — Wed, 19 Jun 2019 19:59:03 GMT

The notice says changes to your tax bill. Amount due.

Re: Unpaid Taxes

NC_Mtg_Loaner — Wed, 19 Jun 2019 20:38:30 GMT

Of course it should be pointed out that whenever you have your loan closing, you are going to sign your final loan application documents where you are attesting to the fact that 'nothing' has changed since you originally applied for your mortgage loan including but not limited to the fact that you are not delinquent on any federal debts.

So, sneaking through the closing without notifying your lender about this would be mortgage loan fraud which isn't really your intent I'm sure, so it's best that you get this matter cleared up with the IRS ASAP. If you were able to send them a payment by tomorrow or Friday, then one next month and another in August you would have your 3 payments made in two months and might not necessarily jeopardize the timing of your loan closing.

Good Luck.