Reverse

Title Tip: Tax History Requirements

Written by Mark King, as originally published in The Reverse Review.

Among the myriad changes surrounding Financial Assessment was the 24-month tax history requirement. With this new rule in place, would-be borrowers must now prove their willingness and ability to pay their real estate taxes—in addition to homeowner association fees and other property-related charges—on time for at least the prior 24-month period.

As we know, if a borrower does not meet HUD’s criteria, they are subject to withholdings in what’s known as “Life Expectancy Set-Aside” (LESA). These funds set aside from the loan proceeds are used for the payment of property charges during the life of the borrower.

There was much buzz in our industry surrounding this requirement. At what point in the process would they be ordered? Who would order them? Could the cost be passed on to the borrower? And so on.

While ultimately this is the lender’s/broker’s responsibility on a nationwide basis, obtaining the necessary information to comply with this requirement can be very time-consuming and frustrating.

Generally speaking, 24-month tax histories use the date the 1009 was executed, and go back 24 months.

Complications and time delays can arise because the requesting party must know the proper taxing authorities and many counties involve two or more entities. Each county, township and state has its own nuances with respect to obtaining the tax histories. In Pennsylvania, for example, there are more than 2,400 taxing authorities to take into account.

A fee is frequently associated with providing this information. In those cases, many taxing authorities require the money upfront in the form of a check. Some counties will provide the information over the phone, but some will not. Many jurisdictions make information available online, but when they don’t, you may have to enlist the aid of an abstractor to physically visit the taxing authority to obtain the information.

Fortunately title insurance companies have access to the abstractors and county resources, and can therefore help in verifying this information. Employing a reverse mortgage title company with these specialty relationships can help save time and energy for loan officers and processors alike. Ultimately, the job is to get the loan closed quickly and efficiently, and sometimes obtaining these records just comes down to strong, solid knowledge of the title/settlement and reverse mortgage business.

 

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