PERSON OF THE WEEK: Property tax services remains an important outsourced function for the mortgage industry and, like all the other parts of the mortgage process, it is being revolutionized by technology.
The need for speed in all aspects of the mortgage process has subsequently resulted in a need for speed for property tax data, which can be a tricky thing to access quickly as there are tens of thousands of municipalities in the U.S. – all using different systems, some old, some new – to report their property tax records.
To learn more about how automation in the mortgage process is driving automation in the property tax reporting arena, MortgageOrb recently interviewed Jonathan Willen, chief revenue officer at LERETA.
Q: What is the next big thing on the horizon for the mortgage industry and how will it affect property tax services?
Willen: Speed, simplicity and quality are the battle cry of every growing mortgage originator. Lenders are using new technology for everything from customer acquisition to alternative valuation solutions and automated title products to attract and retain borrowers. It’s a race to make the lending process as fast and easy as possible.
But once a loan closes and servicing begins, innovation suffers. For more than 30 years, tax service has remained mostly unchanged because loan servicing systems were not built to efficiently manage property taxes. Until recently, tax service providers have simply loaded data into the loan servicing system and then relied on manual processes such as Excel spreadsheets and access databases to manage the business.
Servicers need to make this process easier, more transparent and more efficient through the use of technology and workflow management. With better connectivity into the loan servicing systems, they can have more control to replace manual processes with automation.
Q: What has been the major flaw in the property tax collection process and how can it be addressed?
Willen: Normalizing the collection of data for over 26,000 tax agencies presents challenges, and there are few tax providers with full nationwide coverage.
The goal of every tax service provider is to automate data acquisition and report in “real time” data feeds. But doing so requires the standardization of diverse collectors and bill records.
At our firm, we use technology to not only to acquire data faster but also leverage the use of logic and risk analytics to build better quality assurance check points. A highly automated process must have transparency and a comprehensive quality review to ensure that data is correct from the start. Without this, an automated tax processing service will not catch mistakes that get lost in the data feed.
Q: What role does technology play in helping the property tax collection industry?
Willen: Local tax collectors throughout the country struggle to incorporate innovation and technology in the collection process. Tax collector websites may range from highly advanced to nonexistent. Whatever the reason for the technology gap in this corner of the industry, a tax service provider is forced to wrap technology around a process with little modernization.
Using the technology from a tax servicer allows a lender or servicer to gain efficiency, create transparency and provide increased customer experience; all the while minimizing the risk involved with the tax collection process directly.
Vendor technology in the property tax industry also plays a critical role in regulatory compliance. Lenders need a system of record that time stamps activity and records each step in the procurement and payment process. The Consumer Financial Protection Bureau (CFPB) requires an audit trail that Excel spreadsheets struggle to accommodate.
Q: What are some positive trends you have seen in the industry?
Willen: For far too long, tax service for top tier lenders has been a one trick pony. The lack of competition has fostered complacency and as a result, there has been little innovation in the tax space.
Now we are seeing servicers adopt a champion challenger model – where they bring in another service provider to shift the paradigm. This has forced all tax service providers to up their game.
Competition is a good thing. It breeds creativity and inspires modernization, which is good for the servicer and ultimately, great for homeowners.
Q: How can the tax collection process be improved?
Willen: Better transparency is one area. Seeing as how the industry is automating manual data and revolutionizing the stagnant technology with local collectors, it is increasingly important to incorporate transparency in the process. Lenders and servicers should use property tax service technology that allows loan level visibility, calls attention to risky payments, captures and retains time stamping and provides visibility to exceptions that require attention, among other features. These are just a few of the main ways to practice transparency in tax service.
Also, data can be misinterpreted – and large amounts of data can blur the details or cause a risky item to go unmanaged. A transparent solution holds a tax vendor accountable and allows the client to take action.
Customer service is equally important. Property taxes pose a risk and understanding the state statutes behind each collector is something that no lender or servicer has the bandwidth to study. A tax service provider should be knowledgeable and empathetic toward the risks involved. An automated solution for faster data does not mean that one must lose a positive customer experience and a touch point to understand if one’s products are exceeding expectations.