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ยป VISIT US ONLINE @ DSNEWS.COM 25 PROPER PARCEL MANAGEMENT PREVENTS UNNECESSARY FEES By Mark Collins In the world of mortgage servicing, one of the largest challenges we face daily is discovering errors and omissions, as well as changes to the properties that we service. Between loan boarding setup, and servicing, hundreds of pieces of data are aggregated, written, typed, scanned, or picked up through automated processing, coming together into a single mortgage servicing file. Even then, it is possible the parcels of land making up the mortgage could change. With so many touches and so much data massaging, mistakes happen. Whether the mistake is made by the assessor, the loan originators, the title company, or the servicing vendor, the result is an unhappy client, the costs for which are either immediate (customer service assistance) or long-term (in potentially lost repeat business). It's little wonder that we constantly search for better and more proactive ways to uncover issues before they can be detected by the customer. LERETA has invested a great deal of time and money into detecting multiple parcels that might exist for a given mortgage. While only about one in every 100 mortgages have more than one parcel of land attached to them, the failure to detect or set up those additional parcels is one of the most common and costly errors that occurs in the servicing world. Even if a servicer has an iron-clad process of setting up new loans using crack teams of professionals who scrutinize legal descriptions and ensure that all parcels are boarded onto their servicing systems, through acquisitions of loans from other servicers, the problem of missing parcels can still bite them. e LERETA solution is to create and maintain a database of all properties that are bought and sold together in packages. During new loan setup or acquisition, a search is conducted for the primary parcel serviced by the mortgage, which is then cross-checked against the database of parcels that are packaged together to see if additional parcels exist that are missing from the loan being boarded. Parcels that were missing from servicing systems can then be quickly added back into the servicing platform and checks can be made to ensure there are no unpaid property taxes for them. Often, it is possible to remediate the errors before there are any adverse effects on the mortgage holder. We catch the parcel errors in time to prevent any homeowner impact (late payments/penalties) 94% of the time using the recurring additional parcel search process. However, the system does not completely solve the issue. e number of missing parcels does not fall to zero. Research shows that the data being used to group parcels together sometimes has a "lag" in the timeline. For example, if John Smith purchased two parcels from his neighbor, and this was the first time those two particular parcels were ever packaged together into a single mortgage, the database would not reflect that bundle of parcels at the time of the purchase. It could take a couple of weeks or, depending on the size and complexity of the recorder's office, a couple of months, for the two parcels to be recorded under the same mortgage. Furthermore, what starts as a single parcel in the servicing world can be split into multiple parcels over time. Sometimes the legal description used for titles reflects the intended split of the parcels that will be serviced, but the work to make that split occur and show up as separate tax bills had not been completed by the time the loan is closed. So, a temporary parcel must be used for payment at closing, and sometimes it is carried over into the world of servicing. A note must be made to check and fix that loan to reflect the multiple parcels once the assessor has completed the change. However, that sort of check can be forgotten or delayed. Even more difficult to detect scenarios of a single parcel turning into multiple parcels can arise. In states such as Texas, a homeowner can apply for a "split bill." is might happen when a family purchases a home, and each owner wants to split the tax bill amount equally between them, in such a way that the payment of the bills is formally recorded by the tax collector. In that case, they ask the collector to make a tax bill split, which results in a new parcel being created. at new parcel must then be loaded to the servicing system so that the tax data can be obtained and paid promptly, but it is possible that the servicer may not know the new parcels exists. Ultimately, this can result in "partial payment" of taxes, and thus a delinquent tax situation. ere is a risk of losing the property if the new parcel is not discovered and paid. Because there is an ever-present risk of a servicer not having all parcels covered by a mortgage loaded to their servicing systems, LERETA is introducing an ongoing parcel monitoring service. is is a monthly process where the primary parcels for a property are matched to our proprietary parcel-grouping database to see if newly associated parcels have been recorded and loaded into the database. If new parcels are detected, a search is made to obtain the tax status for the missing parcel and to pursue the payment of those delinquent taxes, if they exist. Repeating this process over time to detect new additional parcels is worth the effort and can solve diverse servicing issues. Mark Collins has worked in the property tax industry for over 30 years, where he has managed key business and technology areas. He has been working with LERETA to meet client needs by refining processes and creating new products for more than four years. Sponsored Content