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National Tax Search Sees Opportunity in Residential

National Tax Search here is interested in moving beyond its core market, providing tax services to commercial mortgage lenders, to serve the residential market as well.

Lori Eshoo, CEO of NTS, said that her firm is not necessarily looking to compete with the big title companies - firms such as Fidelity National Financial and First American Corporation - that also have property tax management divisions geared toward the residential mortgage market.

NTS started looking at the residential market about three years ago, Ms. Eshoo told MSN, and forged ahead with via a partnership with a firm called BridgeSpan. When BridgeSpan's technology eventually morphed into Hall Settlement Services, NTS continued to pursue residential opportunities through a strategic partnership with that firm. That partnership allowed NTS to integrate its tax technology with Hall's title services technology and market tax services to Hall's clients.

The first residential tax service pilot was launched in December and is going well, she said.

Rather, NTS is looking to fill niches in the residential market that might be overlooked by those larger firms, servicing lenders with portfolios that require a flexible approach to tax services.

"There is a large need for delinquent tax management, in addition to boutique tax management," Ms. Eshoo said.

Because of the rise of exotic loan products, such as option payment adjustable-rate mortgages, Ms. Eshoo believes that lenders are focused on the potential for increased delinquencies and defaults, which could heighten their focus on property tax management. In addition, servicing "interim servicers," who may only manage loan administration for a short period before selling the loans servicing released or selling the servicing rights, also is a potential niche, she said.

To further promote the residential side of the business, NTS hired a national residential sales manager about a year ago. That sales manager has a background in the residential side of the business.

At the same time NTS pursues more residential business, the company is growing its commercial mortgage tax services activities as well.

Ms. Eshoo said the commercial side of the business is much different than the residential, because each property is unique and hundreds of thousands of dollars may be at stake in a tax determination.

That means a tax service provider has to "massage every nook and cranny" of a portfolio, especially since one loan might be secured by multiple properties in different states.

Commercial mortgage lenders are looking for an outsource partner that can integrate with the lender's own system, helping to cut the tax related expense per employee and enhancing the reliability of property tax administration.

In addition, the "lingo" used by commercial lenders and the needs of management are different than on the commercial side.

One challenge in selling tax services to the lending industry on both the residential and commercial side is persuading lenders that have already made a substantial investment in one system or contractor to switch to a new vendor. Because tax service contracts are often for the life of the loan, a lender may have to maintain two systems after a switch until all the old loans burn off.

Ms. Eshoo said she tries to meet that challenge by emphasizing the long-term benefits of her company's systems and dedication to customer service. And because she doesn't have to report to a board of directors or a parent company, she can make decisions quickly and decisively to support a client.

"Once we put the customer in the system and have them set up, we are not going to lose that customer," she said. "My focus is to build something that is going to be a strong, long-lasting relationship and is good for both parties.

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