The Internal Revenue Service was the latest to jump on the homeowner aid bandwagon Tuesday with its announcement it would “make it easier for financially distressed homeowners” to avoid having mortgage refinancing or home sales blocked by a federal tax lien. The new process will allow taxpayers, or a representative like a lender, to request that the IRS make its lien secondary to any existing one owned by the lender that is refinancing or restructuring the mortgage. According to the media statement by the IRS, a taxpayer may also request a discharge of a tax lien. Either option takes approximately 30 days to process, but the IRS has said it plans to “speed those requests in the wake of the economic downturn.” In severe cases when a borrower falls so badly behind on tax payments that the IRS must place a lien against the home — a legal claim on the property as repayment of a tax debt — it becomes next to impossible to take out a refi loan on the home or to sell the home, since creditors see the government’s claim on it. There are now more than 1 million federal tax liens outstanding tied to both real and personal property, according to the IRS. “We don’t want the IRS to be a barrier to people saving or selling their homes,” said commissioner Doug Shulman. “We will ensure we have the resources in place to resolve these issues quickly and homeowners can complete their transactions.” The announcement could not come at a better time, either, as survey results announced this week show a continued increase in refinance activity. The Mortgage Banker’s Association reported Wednesday that its weekly refinance application index increased 5.6 percent from the previous week, bringing the refinance share of total mortgage application activity to 76.9 percent, compared with 74.3 percent last week. Online mortgage resource Zillow Mortgage Marketplace also showed a weekly jump — 230 percent — of refinance loan quote requests through its Web site. It’s unclear at this time what effect the IRS’ announcement will have on refinance application volume in coming weeks. Write to Diana Golobay at [email protected].