topic Re: IRS Installment Agreements and Mortgage Requirements in Mortgage Loans

IRS Installment Agreements and Mortgage Requirements

peter1974 — Sat, 10 Oct 2020 02:34:23 GMT

We just completed all the documentation to get our loan process started in preparation for closing. I know that if you owe taxes, they like to see a payment plan in place with on-time pays.

I owe about $50K in taxes and have been on an installment plan with the IRS for almost 2 years now and have been paying on time. When they request my tax return transcripts (form 4506-T) will this info be reflected? Or do I need mention and supply this separately? They didn't ask for it when we were prequalified.

Re: IRS Installment Agreements and Mortgage Requirements

Northerngirl2 — Sat, 10 Oct 2020 03:13:51 GMT

I just had to do this this week. I had told the LO about it beforehand and received a conditional approval. When they reviewed my bank statements, they asked about the IRS payment and added it to my debts. This didn't change my DTI so it wasn't a problem for me. I had to provide documentation so I supplied screenshots of the balance and payment history from the IRS website.

Good luck!

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Sat, 10 Oct 2020 03:25:53 GMT

@Northerngirl2 wrote:
I just had to do this this week. I had told the LO about it beforehand and received a conditional approval. When they reviewed my bank statements, they asked about the IRS payment and added it to my debts. This didn't change my DTI so it wasn't a problem for me. I had to provide documentation so I supplied screenshots of the balance and payment history from the IRS website.

Good luck!

Thanks! How did it not impact your DTI?

Re: IRS Installment Agreements and Mortgage Requirements

Northerngirl2 — Sat, 10 Oct 2020 03:48:37 GMT

You're right, technically it did go from 14% to 18%, but zero impact on qualifying.

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Sat, 10 Oct 2020 05:24:58 GMT

@Northerngirl2 wrote:
You're right, technically it did go from 14% to 18%, but zero impact on qualifying.

Ah ok! My payment plan is $400 a month and we don't have any car payments or other large loan payments so I don't think it will hurt us either.

Re: IRS Installment Agreements and Mortgage Requirements

vertekal — Sat, 10 Oct 2020 18:14:33 GMT

Does your IRS payment plan show up on your credit reports? My credit union said i don't need to mention being on a payment plan as long as it's not reporting anywhere.

Re: IRS Installment Agreements and Mortgage Requirements

Northerngirl2 — Sat, 10 Oct 2020 18:59:25 GMT

@vertekal This debt does not show on my credit report and there are no liens for it. My LO said the same thing about reporting it, however underwriting came back and asked about the recurring $500 payment to the IRS on my bank statements. I provided the LOE and the documentation for the amount owed and the payments.

Re: IRS Installment Agreements and Mortgage Requirements

vertekal — Sat, 10 Oct 2020 19:01:59 GMT

@Northerngirl2 thanks for the detail!

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Sat, 10 Oct 2020 19:39:34 GMT

@vertekal wrote:
Does your IRS payment plan show up on your credit reports? My credit union said i don't need to mention being on a payment plan as long as it's not reporting anywhere.

No, mine aren't showing on my reports nor do I have any liens.

But they do show up on my bank statements. So just to be on the safe side, I uploaded my payment plan info and pay history along with the last 2 year tax returns they asked for.

Re: IRS Installment Agreements and Mortgage Requirements

JVille — Sat, 10 Oct 2020 20:24:29 GMT

It's a Debt whether in your report or not. Do not commit Mortage Fraud by failure to disclose a debt.

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Sun, 11 Oct 2020 16:07:14 GMT

@JVille wrote:
It's a Debt whether in your report or not. Do not commit Mortage Fraud by failure to disclose a debt.

I don't think anyone here is trying to not disclose theirs. My original question was whether my IRS payment agreement info would be reflected when they pull tax transcripts or do I need to supply that separately.

I ended up sending the info separately anyway.

Re: IRS Installment Agreements and Mortgage Requirements

vertekal — Mon, 12 Oct 2020 13:05:25 GMT

I have no problem disclosing it. It won't be factored in to my approval as long as it's not on a credit report.

Re: IRS Installment Agreements and Mortgage Requirements

CreditCuriosity — Mon, 12 Oct 2020 13:17:04 GMT

It will be on your tax forms submitted among bank statements so any UW should see it, but should be up front with them as well. I made them aware of mine when I use to owe thankfully paid off now. Suprised that your payment is only 400 a month at 50k owed... Doesn't seem like you will have it paid off it time frame i believe 7 years is longest you can go?

Re: IRS Installment Agreements and Mortgage Requirements

JVille — Mon, 12 Oct 2020 14:33:13 GMT

@peter1974 my response was not directed at you. Another poster commented that he was advised by his lender he did not need to disclose the Debt/Pmts if it did not appear on his credit report.

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Mon, 12 Oct 2020 14:35:43 GMT

@CreditCuriosity wrote:
It will be on your tax forms submitted among bank statements so any UW should see it, but should be up front with them as well. I made them aware of mine when I use to owe thankfully paid off now. Suprised that your payment is only 400 a month at 50k owed... Doesn't seem like you will have it paid off it time frame i believe 7 years is longest you can go?

I went through a tax service and was able to get an Offer in Compromise.

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Mon, 12 Oct 2020 14:36:31 GMT

@JVille wrote:
@peter1974 my response was not directed at you. Another poster commented that he was advised by his lender he did not need to disclose the Debt/Pmts if it did not appear on his credit report.

Ah ok!

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Fri, 11 Dec 2020 22:26:55 GMT

I just wanted to provide an update: I’m on my second round of conditional approval document requests. This time they asked for my current IRS account statement, payment plan documentation, balances from the last 3 years and payment history.

I quickly provided the documents, but I'm concerned the high balances will cause a snag. I've been on the plan since summer of 2019 and the account is current. I've had on time pay since I started the plan. Payments were suspended from April to June due to the COVID CARES act, but otherwise perfect.

Do I have anything to be concerned about?

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Fri, 11 Dec 2020 23:13:02 GMT

I forgot to mention above that this is an FHA loan.

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Wed, 08 Dec 2021 19:05:21 GMT

Any feedback or insight?

Re: IRS Installment Agreements and Mortgage Requirements

peter1974 — Mon, 14 Dec 2020 17:40:15 GMT

Bump