This suggestion is based on the Tenant recently passing your screening criteria (assumption is you placed a quality tenant).

There are always a lot of unspoken facts and assumptions in this forum.

If disclosed after Acceptance, then you say something like, "I wrote an offer based on certain assumptions, yet it was later disclosed and discovered X,Y,Z.

What was your assumption when you made the offer? 

@Joshua Taffe, short answer: I would keep shopping around, because this is not a loan I would take or pay for.But, these terms seem poor using an assumption that the asset is in good, stable condition and you have a strong credit score and history.  

I say could, because without actually underwriting the deal, the assumptions being used etc. no one can tell you for sure. 

My assumption is you are looking at loan balance of $1mm or less.  

Honestly Laleh, that is my current assumption.

My assumption is if the property goes above opening bid, the mortgage company as first lien holder is paid off, and the Fed as 2nd/3rd recoups the rest, so I would take free and clear of the federal tax lien, but his tax debt would be reduced and he would remain liable.

My assumption is if the property goes above opening bid, the mortgage company as first lien holder is paid off, and the Fed as 2nd/3rd recoups the rest, so I would take free and clear of the federal tax lien, but his tax debt would be reduced and he would remain liable.