IRS Lien
Hello Everyone
I have a homeowner who called me who is in foreclosure. The house is valued at $600k and he owes $380k; however, he has a $460k IRS Lien from his business.
My question? Does the IRS lien take priority? The homeowners attorney seems to think it does not. He is trying to short sale the IRS lien at this point.
I was hoping I could use the IRS lien to negotiate the first mortgage down.
What do others think 
In most cases, the IRS lien will survive the foreclosure proceedings. AND with the house value being significantly more than the IRS lien there is a decent chance that the IRS will exercise their right to sell.
Personally, I would wait on this one until the IRS lien is setled.
ymmv
Now this is a fun situation. You could make a good score on this one. Depends on your access to capital or, your connections with the foreclosing bank.
To remove the IRS lien from the property. It does continue as to the person. The foreclosure sale must occur. The IRS are of course notified, they have a period of time to come forward and pay off the bid amount and take the property. Now does this suggest anything to you??relax, they never do it. Why, I don't know why did Bush only get C's while at Yale. Perhaps it is a plan. People do not worry about you if you look stupid. If I were at IRS, I would push all of those lien positions and turn them into positive cash with quick after foreclosure sales. But wot the hell if you are in a government that prints money I guess it really does not matter.
If you have connections with the REO. Ask him if you can arrange to bid the foreclosure sale. He might if you are heavy enough. Make an arrangement to qualify you for a new mortgage to buy the property after sale. You come up with about $60,000 and they make an agreement to finance your purchase.
In the past they have even bid for you. They make the Bene's bid and then they make your bid. You pick it up for say $400,000 and you now have an equity of $200,000 nice future profit.
I do it a slightly different way. I go to an investor and offer him a set return on his money over a six months period of time. Paper the agreement with great care. Investors are subject to attacks of greed.
You as his agent attend the sale and suitably armed with Cashiers Checks you get the property. You then offer it for sale. The refinance of the new buyer pays off your loan with the investor and you still go home with a great profit.
There is a scam played on this. The owner gets a friend to bid the foreclosure sale and he then rents from him after the sale. Now the Ex owner goes forward to IRS with an Offer In Compromise. He no longer has a big equity in the house he is only a poor lorn renter. He pays off the IRS at about 10% of the outstanding balance due. His friend charges him a nice goody fee and lets him buy back the house.
Of course when I set these up I insist that he buy it in the name of a Land Trust never in his own name. I just do not have good feelings about the IRS.
Now was not that fun and best part profitable. Requires control of capital or the Old Boys Game with the foreclosing bank.
Cheers Lucius