IRS lien is a temporary obstacle to home refinance

“We thought we might have to forgo this transaction for a month or two until our borrowers could get the paperwork with the IRS straightened out. But our homeowner was very persistent with the IRS and was on the phone calling practically every day.”

Mortgage adviser: Dominique Stevens, Mayfair Mortgage Advisors.

Property type: Singlefamily home in Oakland.

Loan amount: $525,000.

Loan type: 30year fixed.

Rate: 2.76%.

Backstory: Our clients had lived in their home for 15 years. We had helped them to both purchase the property and refinance a couple of times as the interest rates declined over time.

They have excellent credit and great jobs, so nabbing a super low rate for them was a nobrainer.

We set up their loan with the bank and locked in the low rate for 30 days. We put the wheels in motion for a quick and easy 30day close of escrow: ordering an appraisal and title report and uploading their income documentation to underwriting for the preliminary review. We encountered a major hiccup when the title company alerted me that the house had an IRS lien of $36,000 in the name of one of the homeowners, who had been selfemployed several years ago and had underpaid her income taxes. To close the loan, that lien would need to be paid in full and proof provided that the IRS lien was removed from the house. Not an easy task considering the IRS offices are closed to the public and shortstaffed due to COVID19.

We thought we might have to forgo this transaction for a month or two until our borrowers could get the paperwork with the IRS straightened out. But our homeowner was very persistent with the IRS and was on the phone calling practically every day. She was able to pay off the lien at a reduced fee, and have the IRS provide her with proof of payment. All were supplied to the title company who was able to confirm the IRS lien was satisfied. With this rush to the finish, we were able to complete their refinance in fewer than 30 days.