FNIS Sees Tax Offices Slowly Embracing New Technology
Great strides have been made in adapting technology to track local property tax bills and tax delinquencies on behalf of mortgage lenders, but to some extent the tax tracking industry is only as good as the local governments it works with, according to Chris McCreary of Fidelity National Information Services' Real Estate Tax Services Division.
Mr. McCreary noted that there are some 26,000 property taxing governmental entities nationwide. In some places, the tax collector may also be the fire chief, and the tax office may only be open two days a week, he said.
"Some of them are very manual. Some of them are very small," he told MSN. "For a lender that is trying to automate every process that they have, there is a frustration."
Anyone who believes that all property tax information is available via websites would be mistaken today, he said. But that may be changing, if slowly.
One of the problems associated with automating county and local property tax records is that it costs money, and spending money is inherently a political issue.
Often times, buying or developing systems to automate county or local records may require a bond measure approved by the voters, Mr. McCreary said.
States where obtaining tax data can be especially cumbersome include New Jersey, Pennsylvania and Louisiana, he said.
But some local governments are moving to automate systems. And others are learning, for better or worse for the tax services industry, to take an entrepreneurial approach to their tax records - which may mean charging more money for access to their information.
"They are viewing it more as a business and the information more as an asset," he said.
At the same time, many counties and taxing authorities are learning how much they benefit from the work of tax service providers to the mortgage industry.
Especially in large jurisdictions, such as Los Angeles, the tax tracking and escrow industry play a huge role in making sure that property taxes get paid on time and accurately, Mr. McCreary said. Fundamentally, he believes that taxing jurisdictions are finding that posting payments electronically means that taxes get paid more quickly and accurately, he said.
"The number of counties that are becoming more automated is growing, it's just slower than the rest of the world," Mr. McCreary said.
Tax service providers such as FNIS' Real Estate Tax Services help lenders by collecting tax bill information for loan accounts where the lender pays taxes through an escrow or impound account, and also by tracking tax delinquency information and matching it against a lender's portfolio to find homeowners who may be at risk of losing their home to a tax lien.
On the technology front, Mr. McCreary said too often lenders obtain incorrect property tax information at the time of loan origination, which means that escrow calculations have to be changed. He said this is an enormous problem for mortgage servicers, and as a result, FNIS is developing a system that will allow lenders to verify the accuracy of property tax information for escrow purposes upfront, so that the servicer does not inherit incorrect information.
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