The current market situation is keeping lenders and mortgage servicers constantly under pressure to stay ahead of the competition and deliver a superior borrower experience. Unfortunately, this makes them unable to prioritize the need to look deep within their operations and identify processes that can be transformed. One such area that remains under the radar is Real Estate Tax delinquency tracking. But in this space, a single mistake can lead to large penalties, additional interest fees, and even the risk of losing the subject property. The result of all of this: very unhappy borrowers and potentially lower profits.
Here are two scenarios which show how lenders are at risk due to limitations in their processes.
The inability to keep oneself updated until the arrival of the tax sale notice - Instead of tracking tax delinquencies, lenders wait for the tax agency to send tax sale notices. This means the property has been delinquent for quite some time, possibly years. This could result in years of accumulated interests and fees, which add to the burden. More importantly, servicers and borrowers both are at risk of losing the property.
Inefficient tracking and lack of visibility with increased dependency on newspaper listings for tax sale - This is the most common error amongst lenders. Instead of waiting for the tax sale notices, they assign a person to go through the local newspapers to find tax sales for their properties. This results in substantial fees for repayment of taxes to save the property. In addition, lenders are at the risk of missing out on a tax sale by completely depending on someone who is combining & collecting information from newspapers. The result: potential loss of property.
Having dealt with lenders and mortgage servicers for over 17 years now, we are aware of the consequence of such practices and the impact on their bottom lines. Additionally, we understand that they are more prone to risk of loss for themselves and the borrower due to human errors or the inability to track real estate taxes and remain updated.
What lenders need today is timely and accurate visibility of delinquency exposure on their portfolio of properties. This is best achieved with technology, rather than human intervention.
What is needed is a platform that can be easily integrated with servicing systems and can perform frequent revalidation of delinquent taxes. This will help lenders get information about the most up-to-date information to resolve the delinquent taxes, thus mitigating any risk from losing a property to tax lien or sale.
Coforge’s Real Estate Tax Service solution (RETS) offers this and much more. This single-instance Real Estate Tax Service platform is currently being used by 2 of the Top 5 U.S. Commercial and Multi-family Servicers to help reduce costs and risks related to tax servicing. RETS boasts of unique features like upfront visibility of delinquent exposure on properties, flexible fee structure based on portfolio attributes, easy customization to specific servicing needs, and real-time customer service with chat, and enhanced client satisfaction with online tracking of inquiries.
RETS also covers full-service escrow & non-escrow reporting, payment processing, delinquent letter service, delinquent tax search, and delinquent tax tracking.