BluefoxToday blog : Even the IRS is trying to help the pummeled real estate market

Even the IRS is trying to help the pummeled real estate market

The letters IRS usually make the neck hair of people to stand up, often followed by a bad word or two. Now, however, at least a few citizens can find something positive to say about the much-reviled agency. The ones who might do that have a federal tax lien currently clouding their homes.

Normally it takes around 30 days to clear out a tax lien when a property is either sold or refinanced. Now IRS is promising to speed up the process although it won't say how long exactly it'll last under their new policy. Regardless, anything that will cut transaction time will be warmly welcomed by the mortgage and real estate industries.

There are a couple of things to keep in mind when a lien is glued on a house. The homeowner, or his representative, can petition IRS to place the lien in a secondary position in the pecking order during a refinance, sale or loan modification process. This is actually called subordination and will then allow the transaction to proceed normally.

The other issue that is relevant in today's marketplace that has seen housing values plummet in most areas is the fact when the homeowner is upside down. In other words, the mortgage balance is higher that what the home is worth. In case of a sale, or even refinance, the IRS can be asked to "discharge" the lien so that the transaction can go on. This will not wipe out the tax lien, though, as many would like to happen. The IRS isn't that nice. It just lifts the lien to permit the sale.

It's hard to say how many homeowners will benefit from this ruling but every little bit that will help the stagnant housing market crawl back on its feet is good news.   


Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 6 commentsEsko Kiuru • December 17 2008 11:48PM


Esko, this market and economy needs all the help it can get

Posted by Jean Powers, CRS,e-PRO,HAFA,SFR Broker, Northern California (Kane & Associates call 510.908.9002) over 10 years ago

I think everyone is helping because they are finally realizing how big of an effect the housing market has on the whole economy.

Posted by Laura Karambelas, Realtor - Downers Grove (Baird & Warner Downers Grove) over 10 years ago

Esko you just taught me something new, I did not realize that you could ask the IRS to take a second position on a lien.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 10 years ago


That is so true.

Posted by Esko Kiuru over 10 years ago


Housing is definitely a key sector in our economy.

Posted by Esko Kiuru over 10 years ago


I myself learned about it just the other day.

Posted by Esko Kiuru over 10 years ago