Accumatch provides a unique blend of industry leading solutions to the Reverse Mortgage Industry. In the past, reverse and traditional mortgagees have been comfortable seeing a simple “paid” status on last year’s property tax reports. However, who paid the taxes has become a critical question, as states like Texas and Nevada have passed laws permitting borrowers to pay their real property tax with a high-interest loan from an institution that is then rewarded with first lien position. The lender’s ability to identify the “who factor” when reviewing the mortgagor’s property tax history will be crucial when reviewing the mortgagor’s direct experience paying taxes.
While it is easier to obtain reliable property tax status data from taxing authorities than in the past, it is still hard to find out who did, in fact, pay the borrower’s property taxes. It seems like an easy question, but in reality most county tax collectors are simply happy to get paid and do not record that information anywhere in their systems. As a result, they show a paid status for the taxes due on their website and in bulk public data extracts used by professional mortgage servicers for payment verification. Even if a lender takes additional steps to reach out and request who paid the taxes, many tax collectors lack the resources to comply with the request in a timely fashion, or at all. Waiting on a tax collector to return phone calls can easily be skipped in an effort to meet closing deadlines and SLAs. But filling in that gap to know who paid the taxes is critical, especially when considering the latest HUD regulations enacted for reverse mortgages, which go into effect in March 2015 and require a two-year tax verification before closing.
Homeowners are eligible for a reverse mortgage at the age of 62, however, they are eligible to enter into a tax lien transfer with little to no restrictions until the age of 65, and even after the age of 65 the limits placed on homeowners are not very restrictive. This opens a significant window of risk for the two years prior to a reverse loan and beyond. The reverse loan covenants state very clearly that the mortgagor shall not permit any liens to be recorded against the property. But, astonishingly enough, tax lien lenders are not required to notify existing mortgage holders before they complete the tax lien transfer, because the states have failed to force this requirement. As a result, a borrower’s decision to take a loan for their delinquent taxes moves the first position mortgage lender into a riskier second position, facing the loss of property through foreclosure by a tax lender if the borrower does not meet the terms of their new tax loan.
Contact Accumatch today to answer the questions surrounding “Who” is paying the property taxes on my collateral and “Am I Losing Lien Position?”