Property Tax Loans Myths

Is a new lien created on the owner’s property when a property tax loan is originated?

There is no new lien created. The existing taxing unit’s lien is simply transferred to the new lienholder.

Do Property Tax Lenders want to foreclose on the property?

No, Property Tax Lenders do not want to foreclose. 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 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, with the positive result of keeping people in their homes and businesses.

Are lienholder payment plans expensive?

In the long run, it is much more expensive to not utilize a payment plan. 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% owed by the end of the 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.

Is a bank, mortgage company, or other creditor is harmed when a property tax lien is transferred?

No, the property tax obligation will always retain a superior lien regardless of who holds it - the county or the Property Tax Lender. The junior creditor (bank or mortgage company) is therefore best served by having that obligation be as small as possible. Because the Property Tax Lender 1.) charges fees less than the county, 2.) creates a plan that starts to reduce the obligation immediately, and 3.) forecloses on less than .5% of properties, the creditor’s position is actually helped by the taxpayer transferring their tax lien.