Many Bad credit Florida mortgage applicants think that once the IRS files a tax lien, it is impossible to refinance your Florida home. This is simply not the case – it is just a matter of knowing the Florida tax lien refinance process.

When you own a Florida home with a tax lien, anyone with a secured interest against your home including: Florida mortgage lender hold priority on who has the first right to the value of your Florida home. Your primary Florida mortgage lender is in line first. Your second Florida mortgage lender is in line second, and so forth. When the IRS files a Federal Tax Lien on your Florida home, they get in line behind all other lien holders.



The problem with a Florida tax lien refinance is typically that you plan to pay off the 1st first or 2nd second Florida mortgage (or both), and the new bad credit Florida mortgage lender that is refinancing your mortgages will now be in line behind the IRS lien. This obviously makes Florida mortgage lenders very nervous because that means that the IRS could foreclose on your Florida home and the new Florida mortgage lender  could get nothing if the tax lien is in front of your mortgages if the home were to go to foreclosure.

As a Florida homeowner in need of a Florida FHA refinance is for the IRS to agree to move to the back of the line behind the new Florida mortgage lender that is refinancing your Florida mortgage. If order to accomplish a Florida refinance with an IRS tax lien you must request Certificate of Subordination from the IRS. In other words, you are asking the IRS to subordinate themselves to the new Florida mortgage lender – to move behind the new Florida mortgage lender in priority.

The IRS will usually agree to do this as long as they are paid at the time of the closing Florida tax lien refinance closing. Let’s say for example you have $50,000 of equity in your home and a Florida tax lien for $60,000. If you refinance and pull all of the $50,000 of equity out of your Florida home, the entire amount will have to be paid to the IRS but you will still owe them another $10,000. Through the Certificate of Subordination, the IRS lien will agree to move to the back of the line as long as they are paid this $50,000.

The IRS announced recently an expedited process that will make it easier for financially distressed Florida homeowners to avoid having a federal tax lien block refinancing of Florida mortgages or the sale of a Florida home.

If taxpayers are looking to refinance or sell a Florida home and there is a federal tax lien filed, there are options. Taxpayers or their representatives, such as Florida mortgage lenders, may request that the IRS make a tax lien secondary to the lien by the Florida lending institution that is refinancing or restructuring a Florida mortgage loan. Taxpayers or their representatives may request that the IRS discharge its claim if the Florida home is being sold for less than the amount of the Florida mortgage lien under certain circumstances.

The process to request a discharge or a subordination of a Florida federal tax lien takes approximately 15 – 30 days after the submission documentation has been completed.

“We don’t want the IRS to be a barrier to saving or selling their Florida homes. We want to raise awareness of these lien options and to speed our decision-making process so Florida homeowners can refinance their Florida mortgages or sell their Florida homes,” said anonymous IRS agent.

“We realize these are difficult times for many Florida homeowners, “We will ensure we have the resources in place to resolve these issues quickly and Florida homeowners can complete their transactions.”

Filing a Notice of Federal Tax Lien is a formal process by which the government makes a legal claim to property as security or payment for a tax debt. It serves as a public notice to other Florida liens and creditors that the government has a claim on the Florida home.

In some cases, a federal tax lien can be made secondary to another Florida mortgage or lien, such as a Florida mortgage lender or institution’s, if the IRS determines that taking a secondary position ultimately will help with collection of the tax debt. That process is called subordination. Florida taxpayers or their representatives can apply for a subordination of a federal tax lien if they are refinancing or restructuring their Florida mortgage. Without lien subordination, taxpayers may be unable to borrow funds or reduce their payments. Florida mortgage lenders generally want their lien to have priority on the Florida home being used as collateral.

To apply for a certificate of lien subordination, people must follow IRS directions located in Publication 784, How to Prepare an Application for a Certificate of Subordination of a Florida Federal Tax Lien. Again, there is no form but there must be a typed letter of request and certain documentation. The request should be mailed to one of 40 Collection Advisory Groups nationwide. See Publication 4235, Collection Advisory Group Addresses, for address information.

Florida taxpayers or their representatives may apply for a certificate of discharge of a Florida tax lien if they are giving up ownership of a Florida, such as selling the Florida home, at an amount less than the Florida mortgage lien if the Florida mortgage lien is senior to the tax lien. The IRS may also issue a certificate of discharge in other circumstances if the Florida taxpayer has sufficient equity in other assets, can substitute other assets, or is able to pay the IRS its equity in the Florida home. Without a tax lien discharge, the Florida homeowner may be unable to complete the home ownership change and the ownership title will remain clouded.

To apply for a Florida mortgage refinance and or tax lien discharge, Florida homeowners must follow directions in Publication 783, Instructions on How to Apply for a Florida Certificate of Discharge of a Federal Tax Lien. There is no form but there must be a typed letter of request and certain documentation. The request should be mailed to one of Collection Advisory Groups nationwide. See Publication 4235 for address information.

The IRS also urges Florida homeowners to contact the agency’s Collection Advisory Group early in the Florida home sale or Florida mortgage refinancing process so that it can begin work on their requests. Sometimes delay informing Florida mortgage lenders of the tax liens, which only serves to delay the sale.

Currently, there are more than 500,000 Florida federal tax liens outstanding tied to both real and personal property. The IRS issues more than 300,00 Florida federal tax lien notices annually.

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