Lender cannot close DSCR loan due to Tax Foreclosure record on Primary residence

Member since 2024 · 9 posts · 2 votes

I was applying for a DSCR on my rental property (cash out refinance) and everything seemed ok, my FICO 680, DSCR 1.08, Appraisal $179K, LTV 65%.

Unfortunately, the lender cannot close due to derogatory on record on my primary residence.

I bought current residence with cash on 2021. I was under impression that property tax was included. Turn out it wasn't and property was in tax foreclosure on 04/29/2024. I bought the property back from the auction on 08/30/2024. This was not on credit history but on chain of title.

Any lender has experience close on situation like this. What is my option here? Is there any work around this. Thank you.

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Tony Savage
Real Estate Broker · San Diego, CA · Member since 2016 · 187 posts · 117 votes
2y
Did your title company miss this property tax lien?
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
2y
Quote from @Chad Wan:

I was applying for a DSCR on my rental property (cash out refinance) and everything seemed ok, my FICO 680, DSCR 1.08, Appraisal $179K, LTV 65%.

Unfortunately, the lender cannot close due to derogatory on record on my primary residence.

I bought current residence with cash on 2021. I was under impression that property tax was included. Turn out it wasn't and property was in tax foreclosure on 04/29/2024. I bought the property back from the auction on 08/30/2024. This was not on credit history but on chain of title.

Any lender has experience close on situation like this. What is my option here? Is there any work around this. Thank you.

Which lender did you use?
It sounds like you have reason for grounds if you bought the property back in auction. Did the lender find out through a personal background check?
[email protected]818-269-7983
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Chad Wan
OP
Member since 2024 · 9 posts · 2 votes
2y
Quote from @Tony Savage:

Did your title company miss this property tax lien?
No. The title company didn't miss it. At the time of transaction, title is clear.
It was my mistake that assume 2021 property tax is paid at the transaction.
The derogatory happen in 2024 when the title is in my name. MI has 3 years delinquent tax.

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Chad Wan
OP
Member since 2024 · 9 posts · 2 votes
2y
Quote from @Erik Estrada:

Quote from @Chad Wan:

I was applying for a DSCR on my rental property (cash out refinance) and everything seemed ok, my FICO 680, DSCR 1.08, Appraisal $179K, LTV 65%.

Unfortunately, the lender cannot close due to derogatory on record on my primary residence.

I bought current residence with cash on 2021. I was under impression that property tax was included. Turn out it wasn't and property was in tax foreclosure on 04/29/2024. I bought the property back from the auction on 08/30/2024. This was not on credit history but on chain of title.

Any lender has experience close on situation like this. What is my option here? Is there any work around this. Thank you.

Which lender did you use?
It sounds like you have reason for grounds if you bought the property back in auction. Did the lender find out through a personal background check?
Not through personal background check. Does lender do the background check?
Title company found out because it was on the chain of title.
I don't know if this is common practice since this is not the subject property to be on a loan.
It is my primary residence.
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
2y
Quote from @Chad Wan:

Quote from @Erik Estrada:

Quote from @Chad Wan:

I was applying for a DSCR on my rental property (cash out refinance) and everything seemed ok, my FICO 680, DSCR 1.08, Appraisal $179K, LTV 65%.

Unfortunately, the lender cannot close due to derogatory on record on my primary residence.

I bought current residence with cash on 2021. I was under impression that property tax was included. Turn out it wasn't and property was in tax foreclosure on 04/29/2024. I bought the property back from the auction on 08/30/2024. This was not on credit history but on chain of title.

Any lender has experience close on situation like this. What is my option here? Is there any work around this. Thank you.

Which lender did you use?
It sounds like you have reason for grounds if you bought the property back in auction. Did the lender find out through a personal background check?
Not through personal background check. Does lender do the background check?
Title company found out because it was on the chain of title.
I don't know if this is common practice since this is not the subject property to be on a loan.
It is my primary residence.

Yea that's very weird. If it's a DSCR loan, the title company will pull get the chain of title from the subject property, not your primary residence. Unless you have a cloud on title for the investment property(subject) for the unpaid taxes.
[email protected]818-269-7983
LuxePrivate Investments LLC 572 Reviews
Website View Page
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Peter Dukaj
Member since 2022 · 4 posts · 0 votes
2y
Im surprised the county foreclosed, I was under the impression you needed 3 years of unpaid taxes, not 1 year unpaid for 3 years
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Chad Wan
OP
Member since 2024 · 9 posts · 2 votes
2y
Quote from @Peter Dukaj:

Im surprised the county foreclosed, I was under the impression you needed 3 years of unpaid taxes, not 1 year unpaid for 3 years
In MI, it is 1 year unpaid for 3 years.
If you pay for recent year, it won't pay for the oldest one first. There are few interesting cases that property owner mistakenly didn't pay the whole amount, and got forclosure on. One in 2019 has less than $10 mis-payment.
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