Tax servicing companies are tasked with achieving customer satisfaction by processing property tax payments in a timely and accurate manner on behalf of their respective lenders. As a tax service company, we must also consider that customer satisfaction extends far beyond merely achieving (or exceeding) our lenders’ expectations. We also have another client’s interest and satisfaction concurrently at stake; namely, the borrower.
The American Dream was founded on the notion that any hard working American family could one day own their very own slice of the land of the free and the home of the brave. Many Americans, nationwide, learned just how desperate holding onto that dream had become after as many as 10 million homes were lost due to the housing crisis in 2008.
While tax service companies do not maintain control of the timely remittance of mortgage payments, they do oversee and control property tax payments, which, when left unpaid, can ultimately result in property loss. Paying all property taxes in a timely manner is therefore of the upmost concern. The implementation of key tax procurement check points along with establishing processing prioritization methods are two approaches in maintaining the security of the American home. Servicers should either choose to implement these methods or make sure they partner with a company that does.
Procurement Check Points
In order to succeed in obtaining an accurate property tax status, procurement processors must be trained to ask the appropriate questions when working with tax collecting authorities. We find that patience and professionalism are two necessary tools to apply in order to help expedite the tax procurement process. We must understand that tax collectors are busy, especially during peak cycles, and so gathering the appropriate information in a succinct single attempt is both the goal of the procurement specialist as well as the tax collector. Of the many necessary questions asked, we must be sure to determine the appropriate check remit type, whether or not an original bill is required with payment, if a duplicate bill fee is required, whom the check is to be made payable to, whether or not the funds have been turned over to a third party, and who (or what entity) paid the last delinquency of record. While many agencies establish web sites that contain delinquent property tax data, should a processor identify a critically delinquent parcel, it behooves us, as a tax service company, to reach out to the tax office in order to verify that their web site contains all relevant payment details.
Each state and tax jurisdiction establishes guidelines in determining how long a property tax can remain unpaid before tax sale, foreclosure and property loss. These guidelines must be gathered and recorded for each of the more than 25,000 tax jurisdictions nationwide. The severity of the delinquencies identified, in terms of when said taxes must be redeemed before loss, are to be prioritized as they are over-laid against the tax agency’s established delinquency guidelines. For example, since a property can be lost within a 12-month period, once property taxes are sold at tax sale, in states such as Connecticut, District of Columbia, Maryland, Rhode Island, South Carolina and Vermont; it is vital to cure all delinquencies before foreclosure proceedings occur.
Without the appropriate understanding of the tax jurisdiction terminology, specific to the classification and severity of delinquencies identified, it is literally impossible to proceed. For example, a procurement processor must know and understand how to process a delinquency that has been sold in a tax lien sale. Since tax lien sales consist of the delinquent base tax amounts, accrued interest and additional costs associated with the sale, the procurement processor must be sure to obtain the complete pay off figures. A processor must also know that there is more than one type of foreclosure sale. For instance, foreclosures by judicial sale, more commonly known as judicial foreclosure, are available in every state. A judicial foreclosure involves the sale of the mortgaged property under the supervision of a court, with the proceeds going first to satisfy the mortgage; then other lien holders; and, finally, the mortgagor/borrower if any proceeds are left. It is important to note the type of foreclosure and status of said foreclosure before proceeding with payment. Therefore, procurement processors must be certain that they are picking up only property tax related charges and fees specific to the secured parcel of record.
These are just two examples whereby an appropriate level of expertise is required in order to understand, classify and prioritize the delinquent item. It is also important to establish a team of specialists that exclusively handles and processes property tax payments for properties that are at risk of loss. At risk property tax specialists must not only pay taxes in a timely manner, but they must also reach out to the tax jurisdiction to ensure that all necessary funds have been received and applied without any residual balances due. Noting the lender’s system at all points of the critical payment process, including the receipt of the delinquent tax payment itself, naturally provides a sense of satisfaction and security to lenders as well as our borrowers.
According to ATTOM Data Solutions, which has a large multi-sourced property database, during the last year, there has been a 23 percent reduction in property auctions, foreclosure filings, default notices and bank repossessions, which just so happens to be the lowest level since 2005. While there are undoubtedly multiple contributing factors involved in the aforementioned reduction, we believe that developing and maintaining proper prioritization and procurement strategies is a great way to do our part in helping to protect the American Dream.
About The Author
Marcus Balocca, vice president, outsource current disbursement manager, has been at LERETA for the last five years of his 18 years in the mortgage servicing industry. In his tenure, he has managed a procurement department, call center, delinquency department and a mailroom. Balocca has worked on multiple servicing systems and currently manages a collective portfolio of more than 750,000 loans for LERETA.