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Help for Unpaid and Delinquent Property Taxes
Many state and county governments allow homeowners the ability to enter into property tax installment plans. Some of these programs have been recently created as a result of the housing crisis and the national recession. With many homeowners struggling, the fact remains that if you do not pay your property taxes on time, then they will become delinquent. In a worst case scenario you could even have your home sold in a local tax auction.
If you do not pay your tax bill on time, most governments will charge you interest, fees and / or other penalties. This will accrue as well, usually per month, on your unpaid property taxes. The good news is that usually these extra charges can be rolled into some form of an installment plan. Another benefit is that when you enter into the plan these fees and additional charges may stop accruing on your account. However the exact details and terms of the plan will vary based upon your local municipality.
How long do I have to pay?
As with anything having to do with property taxes, the exact terms will vary based upon your local government rules and regulations. That being said, the range may be anywhere from one to up to ten years. Some of it is also open to negotiation. Make sure that the terms of any agreement are adhered too and that all payments are made on time. If the taxes still are not paid after that time frame, than a public auction may be be held and your home will be sold at the auction. If you do not want to lose your home in the auction, just make timely payments on your installment plan. If the county does not over you a payment plan, getting a property tax foreclosure prevention loan may be a good idea.
Benefits of our Property Tax Foreclosure Prevention Loan:
Stay in your home and bring your taxes current
Pay off any additional liens on your home
Get some cash out to cover other expenses (bills, medical, home repairs etc)
We DO NOT look at credit scores and credit is NOT a factor
How Unpaid Property Taxes Can Lead to a Sale of Your Home
When a homeowner with financial problems stops paying property taxes, a sale of the property might follow.
Property taxes are often paid through an escrow account that the mortgage lender establishes. The borrower then must pay additional funds for property taxes (as well as homeowners' insurance and homeowners' association fees in some cases) to the lender along with the principal and interest as part of the monthly payment.
If an escrow account isn't set up, the homeowner is supposed to pay the property taxes separately from the mortgage. But when faced with economic difficulties, homeowners sometimes don't pay their property taxes. What happens when a homeowner becomes delinquent on the property taxes? Read on to find out.
What Happens When Property Taxes are Delinquent?
All states have statutes that permit counties to place a lien on a property once the homeowner becomes delinquent on the property taxes. Under most state laws, property tax liens are granted first-lien status and are superior over other liens, including mortgages, regardless of whether the mortgage was recorded before or after the tax lien.
Once the property taxes are delinquent for a sufficiently long time, the taxing authority will typically initiate a tax sale. Generally, a list is recorded in the county records that names the taxpayer, the property, as well as the amount of tax due, and the list will often be published. The taxpayer will receive some form of notice of the tax sale, but in most jurisdictions no judicial action is required.
In some jurisdictions, the property itself is sold at the tax sale to the highest bidder. In other states, the purchaser does not buy the property itself but receives a certificate of purchase; once the redemption period expires, the purchaser obtains title to the property. Other jurisdictions sell tax certificates that allow the holder of the certificate to foreclose the tax lien. And in other places, the taxing authority simply executes its lien by taking the property.
How to Save a Home if Property Taxes are Delinquent
There are several ways to prevent a tax sale of property, other than just paying off the full amount of the delinquent taxes. It is possible to:
Object to the assessments. State and local law usually provide a procedure for a homeowner to challenge the amount of a tax assessment and reduce the tax liability. There are mainly two grounds to contest an assessment. First, the taxpayer can assert that the assessment exceeds the property’s taxable value, meaning its value has been assessed incorrectly. Second, the taxpayer can argue that the property has been disproportionately assessed, meaning that the assessment is higher than assessments of comparable properties in the area. Once the assessment has been reduced, the homeowner might have an easier time paying off the property tax debt.
Seek abatement, a deferral, or a compromise. Each state has exemptions and abatements that reduce at least a portion of the tax liability for some taxpayers. For example, tax liability might be reduced due to a taxpayer’s age, disability, income level, or personal status (such as the surviving spouse of a firefighter or police officer). Some states will also defer property taxes if the taxpayer proves they suffered a financial hardship. However, a deferral might not be available once the taxes have become delinquent. Alternatively, a defaulting taxpayer might be able to negotiate a lower liability with the taxing authority. The taxing authority could agree to waive penalties and interest or give the taxpayer additional time to pay off the delinquency.
After a tax sale happens, the homeowner might be able to redeem the property. Redemption is the right of the property owner to reclaim the property by paying the entire sale price, plus certain additional costs and interest, after the sale so long as it is within the time period allowed by statute. Generally, the purchaser at the tax sale acquires its interest in the property subject to redemption by the former owner. If the taxpayer does not redeem within the prescribed time period, then the purchaser acquires clear title to the property.
Usually, a property won't go to tax sale if there is a mortgage outstanding on the home. This is because the lender or servicer will often advance amounts to pay the property taxes to ensure that their lien is not wiped out in a tax sale. Most mortgages contain a clause that allows the lender to then add these advanced amounts to the total debt that the borrower owes.