Well, as of two weeks ago Fannie Mae is over it. If you’ve got an account with the IRS, she doesn’t want to know you; she’s paranoid.
If you owe back taxes and worked out a payment plan with the IRS, that’s all well and good as far as the IRS is concerned. You have an agreement and a payment schedule and you’re making good on your obligation…all is right in tax land. But the looming cloud that Fannie is trying to avoid is the potential future tax lien.
Her concern is the repercussion of you defaulting on your payments. If you do…you’re looking at a tax lien. If you’ve got a tax lien, that means you still owe money to the IRS and you have a Fannie Mae backed mortgage. Fannie would therefore slip into second place in the payback-pecking-order.
Consequently, in this theoretical scenario, you’re a bad risk. SO…Fannie is gonna save herself the heartbreak and not even entertain a business relationship with you. Hell hath no fury like a woman scorned.
The good news is…FHA and VA loans are not jumping ship and will not hold an IRS payment schedule against you. At the end of the day, the more things change, the more things change. I’ll keep you posted.