Posted by Dade Howell on Tue, Aug 17, 2010 @ 10:45 AM
Can my mortgage company step in and pay my delinquent property taxes?
Yes, your mortgage company can pay your delinquent property taxes without your authorization. Lenders expect borrowers who do not have escrow account to pay their property taxes when due. When property taxes become delinquent, the lender’s security interest in the property may be at risk, and the lender may step in and pay these delinquent amounts to protect their lien priority. Once paid, the lender may then establish an escrow account to be repaid and to accumulate funds for future payment of property taxes. In some cases, this can more than double an individual’s mortgage payment.
To illustrate, here are two very typical stories we discovered via a quick Google search:
“The mortgage company paid the delinquent taxes and have now raised my mortgage payment from $882 to $1,674!”
My lender paid my property taxes without my permission… “result: my payment has gone up 300%, they are attempting to collect the tax they paid as well as penalties for the past year and next year.”
Unfortunately these stories are not rare. In fact we sometimes have mortgage companies step in while we are processing an application for a client. When this happens we are often asked by the client if there is anything we can do to help as their new mortgage payments are more than they can afford, but unfortunately once the mortgage company has paid the taxes, there isn’t anything we can do.
How does getting a property tax loan help?
If your mortgage company is threatening to pay your delinquent property tax bill, getting a property tax loan can help because it can prevent your mortgage company from paying your past due taxes without your permission. Once your property tax loan is funded, the only way your mortgage company can pay off your tax lender is: 1) with your permission, 2) if you are 90 days delinquent with your mortgage company, or 3) if you are 90 days delinquent with your property tax lender. Your lender may not approve of a property tax loan, but keep in mind, when you are delinquent on your property taxes you are already in violation of your Deed of Trust with them and are susceptible to a drastic increase in your mortgage payment if you do nothing. Taking out a property tax loan can give you the edge to negotiate better terms with your mortgage company for repayment of these delinquent taxes should you choose to give them permission to pay off your tax lender. As you can see, in this situation a property tax loan can be a useful tool to help ensure your monthly payment doesn’t skyrocket with your lender.
For more information, please contact a property tax loan officer to discuss your options and to learn more.
Posted by Dade Howell on Thu, Aug 12, 2010 @ 04:01 PM
Are you 65 or older or disabled and considering a property tax loan?
Many Texas residents contact us considering a property tax loan to help with delinquent property taxes and have no idea they may qualify for a deferral program by the state of Texas. As standard practice, we always advise our clients of their rights to a deferral and have decided to write this blog as a guide.
Texas property tax deferral program for 65 or over and disabled homeowners.
Section 33.06 under the Texas Property Tax Code allows homeowners who are 65 or older or disabled to postpone paying property taxes on their homestead for as long as they own and reside in their home. Please visit this link to learn more about your rights or click here to access Form 50-126, which is the Tax Deferral Affidavit required to apply.
When do you qualify and should you postpone paying your property taxes?
If you are a homeowner age 65 or over or disabled, you can defer, or postpone, paying delinquent property taxes on your homestead for as long as you own it and live in it. While entering the deferral program may be a good idea, keep in mind that this program only defers payment; it does NOT cancel the obligation. In fact, interest is added at the rate of 8% annually. Once you no longer own your home or live in it, all the taxes, penalties, and interest become due after 180 days. This can be a real problem for two reasons. One, the compounded interest at 8% can eat up any equity you have in your home very quickly – especially if no payments are made to reduce the unpaid and accruing balance. Two, after the 180 day period, the taxing entities will want all unpaid taxes, penalties, and interest to be paid in full and if these remain unpaid, the collection efforts from the taxing entities can be severe… including a tax lawsuit and foreclosure.
When can someone 65 or older or disabled, not defer their property taxes?
This program is only offered for homesteads where you own the property and reside there. This program is not available for rental or commercial properties. For these types of property, a property tax loan may still be your best option.
Also, your mortgage company (if any) may have language in their Deed of Trust that allows them to accelerate your note if you file for deferred property taxes. So, even if you do qualify through the state, you may not qualify through your obligation to your mortgage company and once again, you may want to consider other options, including a property tax loan.
Posted by Matt Longhofer on Sun, Jun 13, 2010 @ 07:37 AM
With July 1st only a few weeks away, it's now more important than ever to take care of your delinquent property tax bill. Delaying further will just end up costing you more to settle your tax bill.
Why Secure a Property Tax Loan Now?
1. Your tax bill will increase substantially on July 1st. Section 33.07 of the Texas Property Tax Code allows for the application of an additional penalty of up to 20% for delinquent real property taxes not paid prior to July 1st of the year in which they are due.
2. After July 1st, the attorney for the tax collector can file a suit against the delinquent property owner. Failure to respond to this suit may result in a judgment against the property owner for all past due property taxes along with court costs as a result of the tax suit and judgment - all adding increased expenses to the property owner.
3. Your mortgage company, without approval, can set up an escrow account and pay your taxes. Once they've paid your taxes they can demand immediate payment of the escrow shortage. Failure to pay the escrow shortage amount can result in acceleration of your note and foreclosure by the mortgage company.
Why a Property Tax Loan from Property Tax Funding?
Property Tax Funding is an accredited lender holding an A rating with the Better Business Bureau and a proud member of the Texas Property Tax Lienholders Association. Our company is staffed with ethical professionals who will recommend the best solution for your property tax issue. We will provide a straightforward analysis of situation and we will even tell you a property tax loan is not the best solution you.
We offer property tax loans throughout all counties in Texas with concentrations in the following areas: Harris County, Dallas County, Tarrant County, Bexar County, Travis County, El Paso County, and Collin County.
If you are interested in applying for a property tax loan, contact one of our loan officers or complete the online form for a free no obligation analysis from a licensed loan officer.
Posted by Matt Longhofer on Tue, Jun 08, 2010 @ 10:10 PM
Texas Property Taxes Sky High!
We are often asked why Texas property taxes are so high. The answer is simple; Texas doesn't have a state income tax. Although Texas ranked 43rd in overall tax burden (property, sales, and income tax) during 2008, the absence of a state income tax means the responsibility of paying for schools, roads, infrastructure, and social services falls primarily upon the property owner, both commercial and residential. Don't take this the wrong way, we are not advocating a state income tax, rather it is important to understand the landscape of state and local tax revenue sources and their impact to Texas property tax rates.
County, School, and Other Tax Assessors
The typical property owner is subject to a property tax assessment from several entities such as a school district, city, county, and other applicable taxing jurisdictions. Often the entities will consolidate collection into one or two tax collectors, unless you reside in Harris County or Fort Bend County, where it is not uncommon for a given property to see taxes collected by up four separate tax collectors.
You may feel like you are you paying too much for your property taxes. This short video produced by the Travis county property tax assessor in conjunction with the Texas Association of Counties covers 3 ways to reduce your property taxes. In addition, the video covers the common homestead exemption, but also exemptions that are available for seniors, disabled homeowners, and disabled veterans.
Posted by Matt Longhofer on Thu, Jun 03, 2010 @ 03:05 PM
The payment of property taxes is an important responsibility for each property owner. The services provided by our cities and counties along with the schools that educate our children are funded primarily by property tax revenues. Whether you live in Harris, Dallas, Tarrant, Bexar, Travis, or any other county in Texas, the process for paying property taxes is very similar.
Do You Need Help Paying Your Texas Property Taxes?
In this short video call "Tax Facts: How to Pay Property Taxes", you can find useful facts and information for paying your city, school, or county property taxes. The video also provides tips for property owners who need help paying their property taxes.
This video was produced by Travis County in conjunction with the Texas Association of Counties.
Posted by Matt Longhofer on Wed, Jun 02, 2010 @ 10:46 PM
Thinking of a Property Tax Loan?
If you are a property owner in Texas with past due property taxes, you've likely seen your mailbox stuffed with property tax loan offers. While I'm sure many of these mailings have been tossed aside, now may be the time to seek property tax help from a tax lender (see my blog about selecting a trusted lender).
Why the Urgency?
With July just around the corner, property owners should make every effort to pay their past due tax balances before July 1st. Under section 33.07 of the Texas Property Tax Code, delinquent real property taxes not paid prior to July 1st are subject to an additional penalty of up to 20%. This is on top of the monthly penalty & interest charge of 1% - 3%, thus resulting in added penalties of up to 23% on July 1st.
Stop Procrastinating - Get Property Tax Help Now!
Texas based property lenders have helped thousands of property owners avoid these huge penalties, but there are countless more that still need property tax help. Even if you've been putting this off, you can still save hundreds or even thousands of dollars by acting now. By example, a property owner with an initial 2009 property tax bill of $7,500.00 will receive an added penalty of up to $1,725.00 if property taxes are not paid before July 1st.
While a property tax loan may not be the right solution for all borrowers, especially those who owe less than $2,500 in total property taxes, we encourage everyone to at least discuss their options with a knowledgeable tax loan consultant willing to walk you through the options. Doing nothing may be your most expensive decision of all.
Posted by Matt Longhofer on Tue, May 25, 2010 @ 09:36 AM
Each year thousands of property owners find themselves unable to pay their property taxes due to short-term financial problems such as illness, job loss, divorce, or death of a family member. In Texas, property owners are able to obtain more reasonable repayment terms for their unpaid property taxes with a property tax loan. While a property tax loan may not be the right solution for everyone, they do offer many advantages to the property owner.
What is a Property Tax Loan?
- A loan made to the owner of real property for the specific purpose of paying delinquent property taxes. The property tax loan pays a property owner's complete past due property tax liability, including any penalties, interest, and fees.
- Loans are made by third party lenders and secured by a transferred tax lien from the tax assessor.
- A new lien is not created; rather the existing tax lien is transferred from the tax assessor to the third party lender.
Why should a Property Owner Secure a Property Tax Loan?
- Allows property owner to retain property ownership.
- Provides flexible repayment plans.
- Eliminates all fines, legal fees and interest charged by the taxing agency.
- Gives property owner time to solve existing financial problems.
- Keeps property owner from having to make a lump sum payment which might deplete cash reserves.
- The property tax loan is quick and easy to obtain.
How does the Taxing Agency Benefit from a Property Tax Loan?
- The property tax payment is immediately received.
- Collection rates improve.
- Eliminates collection and foreclosure steps.
How is the Mortgage Company helped by a Property Tax Loan?
- Ends foreclosure by the taxing agency.
- Eliminates the need to set up an escrow account.
- Does away with the need to restructure a loan.
Where do I go for more information on Property Tax Loans in Texas?
- You can go to the Texas Property Tax Lienholders Association website at http://www.tptla.org/ for more information on Texas property tax loans.
Posted by Matt Longhofer on Sun, May 16, 2010 @ 10:38 PM
It has been often said that there are two certainties in life, death and taxes. While we hope these certainties are mutually exclusive, property taxes may be the exception. With a sure arrival of a tax bill sometime in October or November and with penalties, interest, and attorney costs that can scare a property owner to death, the annual planning for and paying of property taxes can be an unwelcome event. While there are circumstances that may prevent you from paying your property taxes, the longer you allow your past due property taxes to go unpaid, the more expensive and risky it becomes for you.
What Happens when Property Taxes are Past Due?
Penalty and interest charges will be added to your taxes.
Penalty charges and interest charges will be added to your tax balance. Private attorneys hired by taxing units to collect delinquent accounts can charge an additional penalty to cover their fees. The following table details the potential penalties, interest, and attorney charges imposed on a past due property tax account.
Accounts not paid in full by June 30th of the year in which they become past due are normally referred to a delinquent tax attorney for collection and incur an additional penalty equal to 15% - 20% of the total taxes, penalties and interest due.
- Delinquent tax notices will start arriving.
The tax collector will send you at least one notice that your taxes are past due. They often send multiple notices and warnings along with notices from their delinquent tax attorney.
- You may have the option to set up an installment plan.
Some tax collectors will allow you to pay delinquent taxes in installments for up to 36 months; however, they are not required to offer this option.
- You may be sued!
In many cases the attorney for the tax collector will file a suit against the delinquent property owner. Failure to respond to this suit may result in a judgment against the property for all past due property taxes along with court costs as a result of the tax suit and judgment.
- You could lose your property!
In worst case scenarios, your property can be foreclosed upon. By virtue of Section 32 of the Texas tax code, each taxing unit holds a tax lien on each item of taxable property. A tax lien automatically attaches to property on January 1st each year to secure payment of all taxes. This tax lien gives the tax assessor the power to foreclose on the lien and seize the property. A twenty one day notice must be given to the property owner prior to the foreclosure sale.
What other options available to pay property taxes?
Specialized lenders exist who focus solely on property tax lending. These lenders provide an alternative to the lump sum payment of your property taxes. A property tax loan will immediately stop the added penalties, interest, attorney fees, and pending lawsuits for the county. Most lenders offer flexible loan terms with extended payment schedules. Loans are available for almost any type of real estate as long as the borrower is not in bankruptcy and the property is reasonably maintained. This includes residential, commercial, investment properties, and vacant land. Qualifications are easy and credit score is typically not a factor.
A property tax loan may not be right for everyone, especially property owners with taxes due less than $3,000. Additionally, borrowers with good credit may find lower interest rates through their local bank or credit union. There may be other capital sources available so it's important to investigate all your options.
While you might want to put off addressing your past due property taxes, the most expensive decision is to do nothing. With first year penalties of up to 44%, my advice is to address your past due property taxes sooner rather than later.
Posted by Matt Longhofer on Sun, May 16, 2010 @ 10:11 PM
Each year Texas property owners have the misfortune of receiving their annual property tax levy. Texas has some of the highest property tax rates in the country in a state where property values have held despite the recession. As a result, homeowners have seen little relief in their annual property tax assessment. When it comes to making your annual property tax payment keep note of the important due dates, payment options that may be available, and realize the penalty for late property tax payment can be stiff.
Property Tax Payment - Residential and Commercial Property Taxes in Texas
Those who escrow for taxes and insurance have little to fret over. Your mortgage company will pay the property taxes from your escrow account. You should receive a receipt from the tax assessor indicating payment has been made. The receipt is important to retain, as many homeowners deduct property taxes for federal income tax purposes.
If you don't have an escrow account, you need to have your property taxes paid by January 31st to avoid any penalties or interest charges. If you have not received your tax bill by January 1st, I recommend you contact your tax assessor to determine the amount owed.
Property tax bills often include more than one taxing jurisdiction because some taxing jurisdictions combine their collection operations. Likewise, certain properties will be subject to multiple taxing jurisdictions collected by different assessors. Contact the central appraisal district for your respective county to determine the taxing jurisdictions which apply to your property. Many county central appraisal districts now post their property tax data online.
Property Tax Payment Due Dates and Payment Options
Taxes that remain unpaid on February 1st are considered delinquent with penalty and interest charges added to the original amount. Because taxes are due in one lump sum, coming up with this property tax payment at once can be a challenge. The good news is most tax collection offices provide property tax payment options such as:
- Payment by credit card, typically with additional fees of 3% to 5%.
- Deferment or installment plans for taxes on homestead properties for disabled property owners or property owners over 65 years of age. Check with the County Central Appraisal District to see if you qualify.
- Discounts for early property tax payment.
- Partial payment of your taxes.
Paying your property taxes is an important responsibility for each property owner. The services provided by our cities and counties along with the schools that educate our children are funded by property tax revenues. While there is much debate over the efficient and effective spending of this revenue, without adequate collection the municipal services we have come to expect and enjoy would cease to exist.
Posted by Matt Longhofer on Thu, May 13, 2010 @ 02:52 PM
Is your Property Tax Bill too high?
For most real estate owners, property tax is the second highest property expense, and if there is no mortgage, it may be the highest. The only way for owners to effectively lower their property tax liability is to lower the assessed value of the property itself, and that means filing a protest of the proposed appraised value that is issued in May by the appraisal district. This protest must be filed with the Appraisal Review Board for the county in which the property is located. Even if an owner does not receive a notice of appraised value by mail, that owner has the right to file a protest, however the deadline is generally May 31 of each year. If an owner misses this deadline, there are still remedies available, but they are much more limited.
Property Tax Relief - Based on Market Value or Comparable Properties
In Texas, a property owner can file a protest claiming that the appraised value is either above market value or unequal. Most owners are familiar with the concept of market value, and most understand that the market value can be lowered by identifying comparable sales that indicate a lower value or documenting defects in the subject property that negatively affect the market value. Unfortunately, most owners are not aware that they can also protest the appraised value by claiming that the appraised value is unequal when compared to comparable properties.
Section 42.26(a) of the Texas Tax Code lists the three circumstances in which an owner may obtain relief based on equity, and 42.26(a)(3) describes the one that is most often used: "The appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted."
This means that an owner (or the agent or attorney representing the owner) identifies a reasonable number of comparable properties, makes adjustments to the values based on the characteristics that are different, and then determines the median value of those properties. If the subject property is above that median, then the value of the subject property must be lowered to the median. When creating this analysis, it is critical that the owner make appropriate adjustments because the conclustion will be flawed otherwise, and owner will not likely receive the reduction that is sought. It is also important to remember that one must identify the median (middle), not the mean (average). For example, to determine the median value in a group of five properties, one must identify the third highest (or lowest) value. When using an even-numbered group of properties, take the average of the two middle values.
One of the common complaints I hear from property owners is that the district raised the value of their property to match their recent purchase price but did not raise the value of their neighbors. This remedy allows an owner in that situation to obtain a fair appraised value.
About the Author:
Joshua Estes is an attorney at Estes & Gandhi, P.C., a Texas property tax law firm that represents property owners in efforts to lower their property tax liabilities. Josh is a graduate of Southern Methodist University and the University of Texas School of Law, has spoken on many subjects related to property tax in Texas, and is a long time resident of Fort Worth. He can be reached by email at jestes@estesgandhi.com
