Over the last couple of blogs we have discussed the tax sale process, how it differs from state to state, and the important role of real estate tax monitoring. Tax sales present a major risk—to borrowers and financial institutions alike. If a borrower becomes delinquent on their taxes for as little as six months, they are at risk of losing their property to a tax sale. As you can imagine, this is not only a problem for the borrower, but the financial institution as well. Financial institutions generally do their due diligence in the loan application process, but sometimes risk management of their mortgage portfolio ends there.
Working with a real estate tax monitoring vendor is incredibly beneficial when it comes to preventing tax sales. A good vendor will notify the institution early on (within 30 to 60 days) so that the lender can help the borrower get back on track. Keep in mind that this is not the case for all real estate tax monitoring vendors—some take as long as 120 days to notify the bank or credit union or a delinquent borrower, which could be too late to prevent a tax sale in certain states. This blog will expand on the benefits of working with a dedicated real estate tax monitoring vendor.
Many institutions find themselves on the fence when it comes to outsourcing certain services, including real estate tax monitoring. However, the potential risks surrounding tax sales make outsourcing this particular service a no-brainer. Without the resources, knowledge, and customer service of a quality real estate tax monitoring vendor, your institution is at risk of losing properties to tax sales. It is not uncommon for borrowers to fall delinquent on their property taxes, but this can turn into a major issue if they are delinquent for too long.
By outsourcing real estate tax monitoring to a vendor whose policy is to notify financial institutions of delinquencies in as short a time as possible, you will protect your borrowers, and your institution, from the risk of tax sales.
It’s important to note that all real estate tax monitoring vendors are not created equal it is critical that you research to find a vendor who has your best interests in mind and will go above and beyond to ensure your institution is protected and free of risk. To learn more about the benefits of outsourcing real estate tax monitoring to avoid tax sales, check out our latest ebook, The Impact of Tax Sales on Financial Institutions.