Are reverse mortgages available if there is a tax lien?
When an application for a reverse mortgage is processed, the lender will immediately order a title search. Any tax liens will be uncovered by the title company and reported to the lender. The lender will then require that you pay off the tax lien with the proceeds from the reverse mortgage at the closing. This applies for all loans which are secured by the residence, which includes mortgages, home equity loans and lines of credit.
Clarification on previous answer. Some Tax Liens affect TITLE and some do not, depending on your State of Residence other factors. The previous answer is correct in that any Liens against TITLE must be paid. In addition, all FEDERAL Tax Liens must be paid, since a Reverse Mortgage is a HUD/FHA mortgage and this is an FHA Requirement. However, certain TAX LIENS (i.e. State Liens) that do not affect TITLE and are not Federal in nature don't need to be paid at closing. Also, Federal Tax Liens must be re-filed after 10 years; Otherwise there is language in the Lien itself that releases the obligation at that time. The Lien will still show on Credit, but can be removed with a Credit Supplement. The Statute of Limitations on State Tax Liens (of course) varies by state.
