Cities and municipalities have the right to sell a property for tax arrears. The number of delinquent years and specific process for sale varies from city to city, but the effect is the same.
If you’re working with a borrower facing a tax sale, this is where your skills in crafting a solution will be tested. Usually, if a borrower’s property taxes are in arrears, there are also other debt issues. When presenting the file to a lender, think of these like you would a foreclosure rescue file. You’ll want to provide a comprehensive plan for the lender to show how the borrower got themselves into the situation they’re in, how the new mortgage will fix the situation, and the changes the borrower has made to ensure this financial situation doesn’t occur again.
Property taxes are charges that rank in priority ahead of mortgages, so lenders may be extra cautious in underwriting files where the property taxes have fallen into arrears in the past. A well prepared application will go a long way to getting an approval.