I have a buyer who has a $44,000 IRS tax lien. They have a payment plan and have been making payments monthly for over four years. They say that they have never been late with the payments.

They are buying a house and the seller is paying 3% Down Payment Assistance and 4% closing costs.

I'm working with a mortgage broker who was only able to find one lender that said they would approve this loan without getting the IRS lien subordinated, which would probably take a long time. Yesterday he found out that that his company is no longer doing business with this lender.

The contract requires that the buyer have loan approval by 8-13, and the selling agent has three backup offers, so it looks unlikely that they would extend this time.

Can anyone suggest a lender that might take this loan?

Thanks in advance.

I challenge the validity of there being 1 lender who would allow the IRS to not subordinate. That would mean the loan would be uninsurable by FHA. The risk would fall soley on that lender and the lien would be in first position. I cannot fathom an investor allowing this.

The only option I see that would be insurable and allowable is the subordination. Before you or anyone else puts time into this I would get the full IRS lien pay history. They will likely ask for it. Is it paid through garnishment?

The loan closed yesterday. The only things the lender required were a copy of the payment plan with the IRS and proof that the payments had been made on time for the last 12 months.

That is great information to know. I'm glad it closed. Close call.

I am glad it worked out for you.