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FAQs

Are new liens created on the owner's property?

There is no new lien created. The taxing unit’s existing lien is simply transferred to the new lienholder. The 5th U.S. Circuit Court of Appeals recently issued a ruling and found that tax-lien transfers are not extensions of “credit.” The Court ruled that original tax obligations are not extinguished when property tax lenders pay the taxing authorities the amount equal to what the property owner owes in exchange for liens and promissory notes from the borrowers. The pre-existing tax obligations are simply transferred to new entities.



Isn't the foreclosure rate for Property Tax Lenders high?

The foreclosure rate by Property Tax Lenders is less than .5%. The Property Tax Lenders have no incentive to foreclose because any foreclosure sale proceeds beyond the value of the loan amount go to the property owner or their bank or mortgage lender. The most that lienholders can get back from a foreclosure sale is what they are owed.

Many property tax transfers are made specifically to stop the taxing entity’s
delinquency lawsuit (the precursor to a foreclosure) or the final foreclosure proceedings, thereby keeping people in their homes and businesses.



Are lienholder payments expensive?

Property owners that do nothing rack up taxing unit interest charges, penalty fees, and after six months of delinquency, an extra 15% to 20% (depends on county taxing unit) in law firm collection fees. For most Texans, this means an additional 50% by the time the taxes have been delinquent for a year. The average Property Tax Lender payment plan in 2014 carried an average interest rate of 12.5%, less than 1/3rd the cost of the taxpayer doing nothing and not paying their taxes.



What happens if I'm delinquent in paying my property taxes?

Property tax delinquency almost always triggers a default in the loan documents. Every person that comes to a Property Tax Lender is already in default if such provisions exist. The transfer to a Property Tax Lender actually ensures the delinquency starts getting reduced through the affordable payment plan.