Guest Voices: Tax lien financing helps Texans keep their homes and businesses

By Jack Nelson, For the Express-News | October 29, 2014

Rising property taxes and the lingering effects of the Great Recession put a squeeze on many Texas homeowners and business owners over the past several years. Thousands of Texans have struggled during this period to pay their property taxes, which are the lifeblood of essential public services such as schools and roads. 

Fortunately, the economy gradually continues to improve and fewer property owners need help to pay those taxes to local taxing entities. For those who do still need help, tax lien financing companies provide a solution that can help avert foreclosure for unpaid taxes and keep a family in its home or business while they work through a tough financial stretch. 

It’s called a tax lien transfer. For example, let’s say a homeowner is struggling financially and can’t come up with the money to make a lump sum payment to the tax assessor-collector. The homeowner may be able to work out a payment plan with the assessor-collector, although the assessor-collector can offer a fairly limited range of options for such a plan as specified by state law. 

Or the homeowner may work with a tax lien financing company, which pays off the taxes, late fees and penalties in exchange for a payment plan under which the homeowner pays back the financing company over a period of months or years. About 15,000 Texans annually use such an arrangement to settle overdue property taxes. They get to keep their homes and businesses, and the taxing entities that rely on property tax income get the funding they require to fulfill their obligations. 

Tax lien transfers usually include closing costs to cover expenses such as recording, title and notary fees. The state’s Office of Consumer Credit Commissioner currently allows tax lien financing companies to charge $1,000-$2,000 in closing costs depending on the amount of the taxpayer’s delinquency. 

However, the OCCC recently asked for public comment on a draft of new regulations limiting closing costs to $900, no matter the amount financed. 

It’s great to see the OCCC so strongly demonstrate its support for Texans who are struggling with delinquent property tax bills and who need all the help they can get to pay their taxes and avoid foreclosure by the county. But I’d like to see the state propose even bolder cuts by mandating a maximum $500 in closing costs for residential tax lien transfers. 

Yes, it would mean less profit to tax lien financing companies, including the one that I founded. But in an era in which property taxes have risen much faster than personal income, it’s the right thing to do in order to help our neighbors across the state resolve their tax delinquencies and save their homes and businesses. 

Jack Nelson is CEO and president of Propel Financial Services, the largest tax lien financing company in Texas.