Judgments and IRS Liens Killing the Deal? Here's the Fix.

Your client has equity. They have income. On paper, they look like a fine borrower. Then the title comes back with an IRS lien, a judgment, or both, and the conventional loan you were counting on isn't happening.

This is one of the most common reasons a clean-looking deal falls apart at the last minute. Here's how to keep it from happening, and how to turn the problem into an opportunity for your client.

Why Judgments and Liens Stop a Conventional Loan Cold

Conventional lenders need clean title, full stop. An IRS lien, a judgment from a lawsuit, unpaid property taxes, any of these attached to the property (or the borrower) will get the loan declined or stalled indefinitely while the client scrambles to resolve it. And resolving it usually takes cash the client doesn't have sitting around, which is exactly why they're refinancing in the first place.

We see this constantly: a borrower with real equity, blocked from a lower rate and better terms because of debt that has nothing to do with their ability to make payments going forward.

Paying Off Debt Through Escrow

This is where a private loan solves a problem a conventional lender won't touch. We can pay off IRS liens, judgments, and back property taxes directly through escrow at closing. The debts get satisfied, title comes back clean, and the loan funds, all in the same transaction.

Your client isn't coming up with a separate lump sum to clear their debts before they can even apply for financing. The loan itself does the cleanup.

It's a Twofer

Here's the part worth walking your client through: paying off judgments and liens doesn't just clear title, it improves their credit. Outstanding judgments and IRS liens weigh on FICO scores. Once they're paid off through the loan, that credit hit starts to lift.

That sets your client up for a real refinance down the road. Get them into our loan now to clean up the debt and the credit, then bring them back next year for a conventional refi at a better rate once their FICO has recovered. One deal now, a second deal in twelve months, that's a twofer for your pipeline, not just for your client's balance sheet.

What We Need to Move Fast

Bring us the payoff amounts on the judgments, liens, and any back taxes. We'll structure the loan around clearing those debts through escrow and get you a straight yes or no fast, so you're not left explaining to your client why a lien from three years ago is holding up their entire refinance.

If a deal is stuck on debts, liens, or judgments that a conventional lender won't work around, send us the scenario. Mark Crawford reviews every one personally.

Call Mark Crawford at 310-273-3333 or email Mark@cpfre.com.

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This article is for informational purposes only and does not constitute an offer or solicitation to lend. All loans subject to underwriting approval.