Property Tax Loans and Mortgage Companies – Benefit Analysis
When a property tax loan benefits a property owner – through freeing up financial resources and preserving equity in the underlying asset – it also benefits the mortgage provider. Combine this with the fact that Texas Tax Lenders are regulated by the Office of Consumer Credit Commissioner (OCCC) and must operate under the Texas State Tax Code and the associated Administrative Rules, which provides protections for mortgage companies, it obvious there are plenty of reasons for mortgage providers to support property tax loans.
A Property Tax Loan Can Free Up Financial Resources and Preserve Equity – Good for Mortgage Companies and Their Clients
More and more Texas property owners are finding themselves in a cash crunch, unable to meet the large property tax obligation required by the taxing entities. Many times this is a temporary situation due to an unexpected expense or the loss of a job, yet the penalty structure in place by the tax assessors and their attorneys can be excessive – over 47% over the first year with up to 41.6% coming over the first 6 months – which doesn’t afford the property owner a lot of time to recover financially, while eating up equity in the underlying asset at the same time. This isn’t good for anyone except the taxing entities and their attorneys. Fortunately, the state of Texas allows property owners to arrange a loan with a third party lender who can pay their taxes in exchange for the tax assessor transferring their tax lien to the lender. The benefit of a property tax loan is that it stops the penalties and interest from accruing against the property – preserving equity – while offering flexible repayment terms that can allow the property owner to regain their financial footing. This is great for mortgage companies and their clients because it affords them the best opportunity to meet their current financial obligations, regain control of their finances, and stop the erosion of the equity in the property.
Other Benefits to Mortgage Companies
Not only do Mortgage Companies benefit through preserved equity and their clients having flexible repayment terms – that undoubtedly help them meet their mortgage payments – but they also benefit through state regulations and oversight, which offer them certain protections.
To begin with, once a borrower is 90 days delinquent with a tax lender, the tax lender must send a notification to the mortgage company of record and offer a payoff. In addition, the foreclosure path for a tax lender is quite different than that of the taxing entities and their attorneys. Upon receipt of a judgment for delinquent taxes, the tax assessor can foreclose on a property in as little as 21 days. On the other hand, a Tax Lender must send a minimum of five notifications to all lienholders and must follow a judicial foreclosure procedure, which is a much longer and time consuming process. Additionally, late fees and penalties charged by tax lenders are regulated and also much, much less than that of the taxing entities – this can protect the mortgage company against excessive erosion of equity. All of these are BIG positives for mortgage companies.
When property owners structure a low payment property tax loan, it more likely they will be able control their finances and stay current on their obligations, including their mortgage. Conversely, when mortgage companies force escrow accounts for past due taxes and create escrow catch-up payments that can be 2 to 3 times a borrower’s normal mortgage payments, it’s highly likely the borrower will fall behind. Considering all the negative news and opinions surrounding mortgage companies, they really should consider the consequences of creating forced escrow accounts.
In summary, property tax lenders are offering a service that fits a need for many Texas property owners who are experiencing financial difficulties. In many ways, these loans turn out to be a positive for mortgage companies as the cost, expenses, and risks to the mortgage companies are lower than when the taxes are owed directly to the tax assessor. To learn more about property tax loans, contact Property Tax Funding at 877-776-7391.