This is a question from Texas...
In January of 2005, my mother obtained a reverse mortgage on her house. She opted to get the money from the equity all at once up front. She has spent it all.
The day before she closed on the reverse mortgage, the IRS filed a lien for close to $60,000 on the house.
The IRS had sent her a letter informing her they were about to do so. She was relieved that she was able to close on the reverse mortgage. Evidently the mortgage company had done the title search before the tax lien was filed.
Part of the mortgage arrangement is that she must keep the property taxes and homeowners’ insurance current. She will need around $5,000 at the end of the year to do so.
I don’t see any way for her to pay the bills for the house. My brother and I doubt we can put together the funds to pay them for her.
My question is this – if the taxes and insurance on the house are not paid and the mortgage company decides to terminate the mortgage and sell the house, will she be in any trouble when they learn of the IRS lien? The $60k lien represents 40 – 50% of the amount they could sell the house for. Could she be in any trouble with the IRS if they learn she cashed out the equity from her house and did not pay any of the tax debt with the funds?
Any advice would be greatly appreciated. I am afraid she will end up going to jail for mortgage and/or tax fraud.
In January of 2005, my mother obtained a reverse mortgage on her house. She opted to get the money from the equity all at once up front. She has spent it all.
The day before she closed on the reverse mortgage, the IRS filed a lien for close to $60,000 on the house.
The IRS had sent her a letter informing her they were about to do so. She was relieved that she was able to close on the reverse mortgage. Evidently the mortgage company had done the title search before the tax lien was filed.
Part of the mortgage arrangement is that she must keep the property taxes and homeowners’ insurance current. She will need around $5,000 at the end of the year to do so.
I don’t see any way for her to pay the bills for the house. My brother and I doubt we can put together the funds to pay them for her.
My question is this – if the taxes and insurance on the house are not paid and the mortgage company decides to terminate the mortgage and sell the house, will she be in any trouble when they learn of the IRS lien? The $60k lien represents 40 – 50% of the amount they could sell the house for. Could she be in any trouble with the IRS if they learn she cashed out the equity from her house and did not pay any of the tax debt with the funds?
Any advice would be greatly appreciated. I am afraid she will end up going to jail for mortgage and/or tax fraud.