By Jim McGurer, Senior Vice President, Operations
For the past few years, real estate prices (and home appreciation) have been on a tear. In 2020, the average U.S. home price increased by 10.2%, and this year it’s up again at an average increase of 18.5% year over year. But sooner or later, depending on where your customers live, all this good fortune will translate into higher assessments and tax increases.
While homeowners have been thrilled to see their Zestimates go up month after month, they most likely will be surprised (and less thrilled) to see their escrow [notices] heading north.
Recently, the consumer blog Nerdwallet looked at this issue and warned readers:
“As homes’ value skyrocket, the amount you pay in property tax is likely to go up, too. The magnitude and timing of that increase will vary, depending on where you live. Property tax obligations have the potential to go up swiftly in some states, such as New York and New Jersey. Even states that officially restrict year-over-year hikes, such as California and Texas, can see year-over-year tax increases of hundreds of dollars.”
Will you be ready?
In a normal year, collecting timely and accurate tax information can often be challenging for servicers that handle this process in-house. Given the high origination volumes of the past two years, the ongoing pandemic, the great resignation of 2021 and greater scrutiny from federal and state agencies, 2022 is shaping up to be anything but normal.
If you are handling taxes in-house, here are six questions you should be asking your operations staff now:
- Do we have the staff to handle taxes in 2022?
- Are you prepared to address the mortgage payment changes with borrowers that will coincide with the tax increases?
- How well did we do in the 2021 tax season, in terms of timely and accurate payments?
- How well did your provider do to ensure that your 2021 year-end reporting and payments were completed before the end of the year?
- Has there been an increase in tax-related complaints to the CFPB or a jump in social media complaints?
- Is there a proactive plan to handle borrower communications on tax increases (website posts, statement stuffers, call center scripts?)
If you don’t like the answers you get back, maybe it’s time to consider working with LERETA.