As a lender, particularly if you outsource your real estate tax monitoring, you likely don’t think much about the tax agencies. However, their role in the process impacts you significantly—which is why tax servicers who proactively develop positive relationships with the tax agencies typically offer lenders better service.
Why? When tax servicers work with the tax agencies to form a mutually beneficial process, it makes life easier for tax collector, and makes the process more efficient for all parties. This blog will overview the various benefits that lenders experience as a result of their tax servicer working closely with the tax agencies (as opposed to servicers with a cookie cutter process).
There are two main ways that the tax servicer often saves money through the process of developing a good relationship with the tax agency.
In some cases, the tax agency will actually give the servicer a break in costs (such as the cost to obtain the tax amounts) for being proactive and easy to work with. The tax servicer is making the tax collector’s job easier and more efficient, so the tax collector often rewards them with a reduced fee.
By focusing on developing mutually beneficial processes, the tax servicer is developing its own efficiencies that save it money. Though it takes some up-front work and commitment to reach out to each tax agency and tailor a process for them, the long-term efficiencies gained are well worth it.
These cost savings are often passed down to the lender in the form of lower fees, because the tax servicer is incurring less costs to perform the service.
Better customer service for borrowers
The second main benefit for lenders is the ability to provide better customer service for their borrowers. Here’s how:
The servicer obtains tax amounts in a more timely manner due to the proactively developed process between the parties, allowing the lender to pay taxes sooner for the borrower. In addition, this often allows the lender to pay during a discount period to save the borrowers money.
Having an efficient and effective process ensures that the information the servicer obtains is accurate, so the lender never has to worry about paying the wrong amount or paying the wrong parcel—each of which would prompt both late fees and borrower mistrust.
Finally, the lender has the option to pass their cost savings down to their borrowers as well.
The relationship between a tax servicer and tax agency is more important than you may think. If you want to learn more about how it affects you as a lender, take a look at our ebook: Tax Servicers and Tax Agencies: Better Together.