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HELP! - MY MORTGAGE COMPANY PAID MY PAST DUE PROPERTY TAXES

  
  
  

property tax loan texas resized 600Can 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.

 

 

Comments

Early this year my wife and I lost our house in California for the same reason, even though we had called the county for an extension on the tax. My question is where in the U.S. Code is this allowed? All I ever hear are people saying it is but never do I see a reference to an actual law.
Posted @ Friday, September 03, 2010 2:10 PM by Nigel Deans
The Deed of Trust or Mortgage you signed with your lender likely contained a provision for payment of property taxes. Normally this provision allows your mortgage company to pay your delinquent property taxes without approval.
Posted @ Tuesday, September 07, 2010 5:08 PM by Matt Longhofer
where do we (the poor folks) get help i have lived in my home for 20 years yes, i made a mistake in not escrowing and accepting an ARM i now owe tax for 2009 and 2010 When my lender (bk of Am) pays these taxes which they are going to do if not paid in full by 10/2/2010 my payment will be well above my means. i don't have anywhere to go or anyone to help by the way i am 69 years old, "retired" and working 2 parttime jobs still, i can handle the payment now but when BAC pays my real estate taxes i will be homeless
Posted @ Thursday, September 16, 2010 1:40 PM by sandra mcgregor kane
Unfortunately your situation is not uncommon. We’ve seen many examples of forced escrow accounts from mortgage companies driving homeowners into foreclosure. Since you are over 65, you may qualify for a property tax deferral (see our blog article on the Texas Property Tax Deferral Program). At this point you’ll need to work with your mortgage company to extend the escrow repayment plan.
Posted @ Wednesday, September 22, 2010 8:31 AM by Matt Longhofer
Shouldn't the mortgage at least have to send a certifed letter on their intention to pay the back taxes before they just do it behind your back, so you at least have a chance to make an agreement w/your county. My company states they sent a letter, but I never rec'd it. Now my pymt has went from $719 to $1900! There must be something in the law that makes them follow some guideline on how they proceed with this process. I live in NY. thank you!
Posted @ Thursday, September 30, 2010 8:58 PM by Sharon Dumas
Although I have not reviewed any of the Deeds of Trust or Mortgage agreements, I do question whether "non-payment of taxes" and "deferment of taxes" are really one in the same. I understand that most of the agreements used by mortgage companies state that a borrower is in default for non-payment of taxes, but isn't deferment different? I understand the concept that non-payment of taxes results in a possible superior lien on the property; however, for fair notice purposes, shouldn't mortgage loan companies be required to specify that the borrower also may not defer taxes under the agreement?
Posted @ Tuesday, October 19, 2010 11:50 PM by Question
I didn't pay my property tax because I ran into financial problems first time in my life, and now my mortgage payment is doubled. I can't make that payment, so the bank will be taking my house away. Are the mortgage companies getting kickbacks from the government for every home that they foreclose? Seems so to me. I would think the bank would try to help you with this situation, rather than jumping to foreclose!!!
Posted @ Thursday, December 15, 2011 3:13 PM by Lottie Kurdek
My mortgage company just paid the first half of my property taxes that aren't due until April 2013! They haven't even paid all of 2011 yet - the county i live in bills one year in arrears. Now my house payment is going up $350\month.  
Can they do that? I have cash set aside to pay into the escrow to avoid this but since they paid one year early, that is going to mess everything up.
Posted @ Wednesday, March 21, 2012 11:28 AM by Angie
I have for 13 years been paying my own taxes and insurance. In November 2011 my mortgage company decided to pay my property taxes in my behalf. I can understand that they can do this if they are DELINQUENT- but not if they are CURRENT? And not YET passed due. They then doubled my mortgage payment. When I saw this- I immediately called and made arrangements to pay them back so the escrows would be dropped. They agreed, I paid and just days ago I get a call from collections. It seems they not only miss- applied the reimbursement- paid some kind of delinquency?? Not sure what since they paid the taxes! and furthermore paid 2012 already! I am furious and plain out not able to pay the taxes at this time- just opened a new business and need the Winter months to re-coop my funds. The way the tax bills read is that you can pay in November with no penalty but have until at least April before they go to the tax deed stage- yet still even then - the property isn't in jeopardy. Can I force them to just add the amount to the loan- rather than try and escrow? I can't afford even to pay double every month. Just doesn't seem right to me. What are the consequences if I just continue to pay my normal mortgage payment on time?
Posted @ Thursday, December 20, 2012 2:50 PM by Jessica Clark
I had a disability deferral for my property taxes that 1st Franklin honored for 5 years, and then they paid all the taxes for the 5 years. My payment increased from $797 to over $2,500 a month. Then a few months after they paid the taxes, First Franklin sold my loan to Bank of America. I couldn't make the $2,500/mo payment and I couldn't pay the $19,000 First Franklin paid. All attempts to modify have failed, since apparently they don't take the "negative escrow" into account. I am in the beginning of selling "short sale". Do I have any remedies to sue since they paid my deferred property taxes?
Posted @ Tuesday, April 09, 2013 10:02 PM by Alma
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