LERETA’S Review Services Can Prevent Errors by 29%
If a closing occurs within 60 days of a tax due date, it is typically assumed that the taxes have been paid at closing.
Unfortunately, the inconsistencies at closing could lead to delinquent taxes, refunds and borrower disruption.
The Industry-Wide Issue
The borrower’s tax due date is beyond 60 days out from the loan closing. These taxes were paid. However, based on the closing rules, the taxes should be paid through the escrow account post-closing. The tax bill has been paid twice and the borrower will have to wait for a refund to be issued from the tax-collecting entity.
Or: The borrower’s tax due date was within 60 days from the loan closing. The taxes were not paid. However, based on the closing rules, the taxes should have been paid at closing and not from the escrow account. The lender has not paid the taxes and now there is a delinquent bill.
Case Study 1
Tax Line Set Up Error Rate Identified: 24%
- 75,948 loans originated
- 31,146 sample size of loans reviewed that were eligible for the 60-day assumed paid rule
- 250 potential delinquencies
- 5,280 potential duplicate payments
Note: The 60-day assumed paid rule refers to the assumption
the loan has been paid 60 days out from closing
Case Study 2
Tax Line Set Up Error Rate Identified: 29%
- 12,243 loans originated
- 8,356 sample size of loans reviewed that were eligible for the 60-day assumed paid rule
- 34 potential delinquencies
- 1,118 potential duplicate payments
Note: Case studies conducted across 7 months, October 2020 – April 2021
The LERETA Way
LERETA’s new Document Review bridges the gap between closing and servicing.
It balances manual review with automation to create a smooth and accurate experience for our clients and their customers.
LERETA’s Document Review reduces tax line set up errors by 27%