Property tax problems for customers of bankrupt lender

Property tax bills will be showing up in homeowner mailboxes over the next few weeks.

For most people, the statement is just for informational purposes. Their monthly mortgage payment includes money that's put into an escrow account so that the lender can pay the home's tax bill each year.

But what if your mortgage company doesn't make the payment?

Then you're the one in trouble. Possibly big trouble.

Yep, just like your federal income tax return where you're liable for the information on the 1040 even if you have a professional fill it out for you, the ultimate responsibility for payment of your property tax bill is ultimately yours.

If the county (or parish) tax assessor doesn't get your payment on time, regardless of who's issuing the check, you will owe a late fee.

And if the county (or parish) tax assessor doesn't get your property tax payment at all, you are going to be the one who could lose the house in a tax lien action.

It doesn't take much. Remember that Louisiana couple who almost lost their home because of an unpaid $1.63 bill?

Well, a similar sad situation has arisen for some folks who had a mortgage with American Home Mortgage Investment Corp. In these cases, the nonpayment of tax bills was compounded by the fact that AHM also is in bankruptcy, presenting a whole 'nother set of problems, for itself and its customers.

But the upshot, as one observer noted, is that property tax bills are going unpaid, "resulting in increased tax liabilities and possible tax-foreclosure sales."

You can read more on the AHM issues in this item from Mapgirl’s Fiscal Challenge or, if you have a subscription to the online Wall Street Journal, in that paper's original report on the matter.

Trust but verify: The hubby and I have owned five homes in three states -- sequentially, not all at once! Our Austin house is the first one where we've been able to make the property tax (and homeowners insurance) payments ourselves.

With our three Maryland mortgages and one in Florida, the lender demanded we funnel those payments through them. But I never implicitly trusted our various mortgage companies to pay the tax and insurance bills.

I would always call the lenders when our tax and insurance bills were coming due to "remind" them to pay and pay on time. (See, dear hubby, I nag everyone!)

Our lenders were as happy as I was when online access arrived, allowing me to electronically check our account status to ease my mind about whether they had issued the appropriate checks. No more waiting on hold by me, and no more irritating questions for the mortgage company rep who answered the phone that day.

Early payment savings: Naturally, I first wanted to make sure that the bills were paid. But when it comes to property tax levies, most jurisdictions give you a bit of a break if you pay the bill on time.

For example, you can pay your 2007 property tax bill any time between Nov. 1, 2007, and March 31, 2008. But if you pay it in November, the county will give you a 4 percent reduction. For a $1,000 bill, you get $40 off. That's a dinner out!

The breaks typically are phased out; 3 percent off for December payments, 2 percent for January, 1 percent for February and no break if you just get your bill payment in on time in March.

I definitely wanted to make sure the bank paid early enough to get the biggest discount. That meant a little less that we had to have escrowed.

Now that we're making the payments ourselves, we actually get to take real advantage of the savings, rather than seeing a little more left in our escrow account that we couldn't touch.

If your mortgage holder pays your property tax (and insurance) bills, I highly recommend nagging giving them a friendly reminder to pay up expeditiously. First, you want to make sure your tax responsibilities are met.

And getting a little money back, even if it's in your escrow and not your checking account, is always welcome.