tax lien on home w/reverse mortgage

[ElMono]

What is the name of your state? 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 tax debt stems from her cashing money out of a retirement account early and not paying taxes on the funds (plus interest and penalties).

The IRS had sent her a letter informing her they were going to file the lien. 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 foreclose on the mortgage and sell the house, 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?

I hope I am posting to the right forum. Any advice would be greatly appreciated. I am afraid she will end up going to jail for mortgage and/or tax fraud.

 

[nextwife]

She ALREADY committed fraud, which the insuring title company who wrote the loan policy will discover when they run the final policy search. That lien will be in first poriority IN FRONT of the new mortgage.

THe fraud occurred when Mom failed to disclose the impending lien on the "Owner's Affidavit" that she would have signed at the loan closing. Title companies have deep pockets and they will NOT be happy about the mortgage ending up SECOND priority, BEHIND an undisclosed tax lien.

 

[seniorjudge]

What is the name of your state? 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 tax debt stems from her cashing money out of a retirement account early and not paying taxes on the funds (plus interest and penalties).

The IRS had sent her a letter informing her they were going to file the lien. 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 foreclose on the mortgage and sell the house, 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?

I hope I am posting to the right forum. Any advice would be greatly appreciated. I am afraid she will end up going to jail for mortgage and/or tax fraud.

quadruple post

 

[seniorjudge]

She ALREADY committed fraud, which the insuring title company who wrote the loan policy will discover when they run the final policy search. That lien will be in first poriority IN FRONT of the new mortgage.

THe fraud occurred when Mom failed to disclose the impending lien on the "Owner's Affidavit" that she would have signed at the loan closing. Title companies have deep pockets and they will NOT be happy about the mortgage ending up SECOND priority, BEHIND an undisclosed tax lien.

don't encourage quadruple posters

 

[nextwife]

I had not seen the other posts, I only arrived home a while ago.

 

[ElMono]

sorry about the quadruple posts

Visions of Mom hauled off to jail dancing in my head.
Have some consideration!
She is only getting stranger and stranger and harder to deal with.
She is on three different kinds of psycho-active medications. We have trouble reasoning with her and only find out about her strange actions after the fact - like the tax debt and subsequent lien. The reverse mortgage just about gave me a heart attack. And then the shock that she had spent all the money in under a year.
It just keeps getting weirder. I thank God everyday that my in-laws are sane and we only have to deal with this on one side of the family.

 

[LdiJ]

What is the name of your state? 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 tax debt stems from her cashing money out of a retirement account early and not paying taxes on the funds (plus interest and penalties).

The IRS had sent her a letter informing her they were going to file the lien. 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 foreclose on the mortgage and sell the house, 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?

I hope I am posting to the right forum. Any advice would be greatly appreciated. I am afraid she will end up going to jail for mortgage and/or tax fraud.

No, she won't get into any extra trouble with the IRS for that reason. The IRS routinely places liens on assets without knowing whether or not that lien will eventually produce any cash or not.

However, regardless of that your mother's problems with the IRS are serious....and apparently your mother's problems with money are also serious if she has both cashed out and spent her retirement funds as well as cashed out and spent the equity in her home.

The IRS can guarnish any social security that she might recieve...and will. You and your brother are likely going to end up supporting your mother in her old age.

 

[seniorjudge]

No, she won't get into any extra trouble with the IRS for that reason. The IRS routinely places liens on assets without knowing whether or not that lien will eventually produce any cash or not.

However, regardless of that your mother's problems with the IRS are serious....and apparently your mother's problems with money are also serious if she has both cashed out and spent her retirement funds as well as cashed out and spent the equity in her home.

The IRS can guarnish any social security that she might recieve...and will. You and your brother are likely going to end up supporting your mother in her old age.

I thought you knew better than to encourage quadruple posters!

 

[LdiJ]

I thought you knew better than to encourage quadruple posters!

I saw this post on this board only....and I have to admit that I replied without noticing that there were previous replies.....Mea Culpa, Mea Culpa, Mea Maximus Culpa.

 

[ElMono]

Dear Senior Judge

I had no idea I wasn't supposed to post the same question in multiple forums. I wasn't getting a reply to the first post and did not know where to ask the question.

Please no one else respond to my quadruple post so SeniorJudge doesn't have to bother to tell you not to respond to my question.

After all, my mother's problems are just trifling compared to the problem of quadruple posts.