tax amounts, at what point funds for payment will need to be certified, and when the institution’s servicing department will be busiest. What makes due dates challenging is that they vary from agency to agency, by the number of installments, and in certain locations, can change from year to year. Let’s look at some examples: • Installments Some tax agencies vary between offering one, two, or more installments for property tax payments. With twoinstallment agencies, these due dates can either be in the same calendar year or straddle two years. When reaching out to these agencies to get tax amounts, it’s important that institutions understand which tax year to refer to. While some states’ due dates seem straightforward, as soon as you start crossing into other states the complexity can grow. For example, in Colorado, there are typically just one or two installments, but different counties can set their own due dates and installments. It is important for banks to keep up with researching and making sure to stay on top of changes in installments. Moving to other areas of the country where there are municipality level payments, a financial institution might encounter one city with two installment dates and another with ten. • Due Date Variation A perfect example of an area where due dates change from year to year is the state of Texas. Texas is a municipality level state, meaning that each city or township sets their own due dates and discount dates. Often the only way for a financial institution to know what the new dates are is to call the agency or check their website (if they have one) every couple of weeks until the local government has set the new dates. Another due date variation is discount dates. These are essentially due dates that come a month or two ahead of the normal due date, and by paying by this date, the financial institution or homeowner will get a percent discount on their property tax amount. Understanding these discount dates and making timely payments can save a substantial amount of money on high-valued properties. Gathering Property Tax Data Once the bank understands the due dates and installment rules for where they have mortgages, the next step is finding and gathering the property tax data for each property. Each taxing agency may offer one or several of the following methods for gathering tax info, each with its own pros and cons: • Websites: Many larger agencies will have property tax portals that allow anyone to search for property tax information by a range of criteria. ◦ The benefits of websites are that they are typically more up-to-date, allow on-demand access, and often offer the ability to see historical data for the property. ◦ The downsides to websites include the possibility of per-parcel search fees, the site not being updated regularly (old data), only displaying the billed or due amount, downtime for maintenance, and data errors. • Tax Rolls (Excel file, PDF scan, Paper Reports): Agencies of all sizes can offer some form of tax roll. These vary from Excel files to scans of paper reports or, in some instances, physical paper reports that must be mailed to you. ◦ Benefits of tax rolls include being able to easily search the entire agency’s database on one screen, easy copy/pasting of data from the tax roll to another database, custom sorting, and the fact that most employees are familiar with using Microsoft Excel. ◦ Cons of tax rolls are that they can sometimes cost thousands of dollars for a single tax roll, may come unformatted, have large file sizes, don’t contain all the data needed, or are out of date. • Fax, Email, or Phone: More common amongst smaller taxing agencies, banks may have to request property tax data via fax, email, or a phone call and then receive the results via that same method. ◦ Benefits of these methods are limited. Email is typically the best of these options as there is a digital record of the information and it can be copied/pasted from the email into a database. ◦ Cons of fax/email/phone are that the data can contain mistakes by the person at the agency providing the information. When it comes to phone calls, both the financial institution employee and the tax agency employee must be accurate in communicating and recording the data they’re looking for. These methods also require connecting with the right person at the agency, which can be especially difficult when an agency has odd office hours. • In-person (becoming increasingly rare): Luckily, there are only a handful of these agencies left in the country. There are really no pros to this approach, and it is recommended that banks find other means of getting tax data whenever possible. Regardless of which method a bank uses to get the data, the timing of when that data will become available can be tricky. In some cases, tax amounts may not be made available until as short as 2–3 weeks before the due date. Once the data is made available, agencies can and do make mistakes, resulting in adjustments to tax amounts well after they’ve been “certified.” When this happens, institutions will need to reach back out to the tax agency to gather updated amounts and communicate this to their borrowers. Lastly, gathering the tax data needed to make escrow tax payments includes one final hurdle: the human element. Smaller tax agencies often use local collectors. These individuals are sometimes collecting taxes out of their homes, many times with limited or no technological systems to support the data collection process. In addition, in some March • April 2023 21
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