My Property Taxes Are Delinquent

My Property Taxes Are Delinquent

I was in the office speaking to one of our agents yesterday. He was relating how a client who he had helped to purchase a new home about five years ago had lost the home to foreclosure.

It all started when the home was purchased. The taxes were based on a vacant lot so the lender set up the escrow account to collect the taxes. Typically by the end of the first year, the taxing authority has added an assessment for the dwelling and the homeowners’ escrow account has a shortfall.

This one was worse. Apparently the taxing authority never reassessed the property and caught the mistake four years later. The homeowner was faced with a $16,000 shortfall. They could not pay it, so the lender paid it and set up their escrow account to collect the shortfall and enough to cover the taxes going forward.  This added almost $1700 a month raising their payment from $1800 to $3500 a month. Talk about payment shock!

Knowing they could not make those kinds of payments, they rented an apartment and let the home go into foreclosure. This is truly sad since most lenders are willing to work with homeowners in this situation.

I recently worked a deal with Bank of America (I am an NMLS licensed MLO and Texas Law allows me to work on loan modifications), where the bank paid the taxes and allowed the homeowner to repay the bank over 5 years with no interest. I’ve also worked a deal with another lender to pay the taxes and add the balance to the end of the existing note.

If you’re behind on your property taxes, you really need to call your lender or servicer and ask for help. There’s no need to walk away from your home!  

Tom Branch, Broker, CDPE, SFR