Softening the Impact of Spiking Escrows: Incenter’s Craig Eagleson & Alison Tulio
Alison Tulio is President, Incenter Tax Solutions, whose mission is to ensure that property owners’ tax assessments are accurate and fair. Contact her at alison.tulio@incenterls.com or see incentertaxsolutions.com.
Craig Eagleson is President and Chief Revenue Officer, Incenter Insurance Solutions, a national insurance broker. Contact him at craig.eagleson@incenterls.com or see incenterinsurance.com.
High valuations and interest rates are not the only factors that have negatively impacted the mortgage industry. Added to these major hurdles, spiking escrows due to rising property tax assessments and homeowners insurance costs are pushing some borrowers to the brink of default. MBA NewsLink asked Alison Tulio, Esq., President, Incenter Tax Solutions, and Craig Eagleson, President and Chief Revenue Officer, Incenter Insurance Solutions, what they’re seeing, and how lenders and servicers should respond.
MBA NewsLink: How big an issue is spiking escrows for borrowers, lenders and servicers?
Craig Eagleson: It’s huge. I’m constantly hearing from lenders and servicers who are worried that this will tip the scales for homeowners. On the insurance side alone, premiums for some consumers have gone up more than 60%.
When I’m not receiving calls from servicers, I’m reading about the issue. For example, I saw your recent coverage of the Auction.com survey of banks, nonbanks and others—pointing to homeowners insurance and property taxes as the largest potential risks “for triggering higher delinquency rates in 2024.” That should open everyone’s eyes in the mortgage industry. Even if the risk stays relatively low, any foreclosure that could have been prevented is a black eye for all of us.
Alison Tulio: On the property tax side, my phone is ringing off the hook with property owners inquiring about their increased mortgage payments. I’m especially concerned about current homeowners who are on fixed incomes or who were recently laid off. We need to do everything we can to help them deal with the escrow problem. This is lenders’ and servicers’ moment to step in and support struggling borrowers.
MBA NewsLink: Is this a national or a regional issue?
Alison Tulio: We both run national firms, and we’re hearing from lenders and servicers from every corner of the country that it’s a problem. Generally speaking, property taxes are increasing throughout the country.
Craig Eagleson: Not only does the problem stretch across state lines; the implications for some borrowers are sobering. I saw a recent Claimguide.org report that said some homeowners are reducing spending on medicine so they can pay their homeowners insurance premiums. It’s so important for lenders and servicers to get their arms around this issue, both from a business and a human perspective.
MBA NewsLink: What do you recommend that lenders and servicers do first?
Alison Tulio: They should definitely look for signs of potential distress. Are more borrowers suddenly paying late? Are their call centers seeing a rise in borrowers asking if there are any relief plans? It’s better to be proactive—and help remediate—that first sign of struggle and preempt every default. In addition, they should advise their borrowers to have their property taxes reviewed.
MBA NewsLink: What actions should they take?
Craig Eagleson: One option is to develop a proactive rescue plan that goes into action the minute a borrower pays late. Two elements could include property tax reviews/appeals and insurance reviews. It’s true that climate change and other factors have made the insurance landscape more dynamic—but there are often more ways to lower a price without sacrificing coverage than homeowners realize. In Florida, for instance, where major insurers exited, new ones are coming in and homeowners should be able to compare them.
MBA NewsLink: Is there anything else you would recommend over the long term?
Alison Tulio: Lenders and servicers really should form a customer task force for identifying struggling borrowers, reaching out to them with solutions for potentially lowering their escrow payments, modifying the loan if necessary and creating a path back to mortgage affordability.
Craig Eagleson: Basically, we recommend following the same principles with spiking escrows that successful mortgage firms did during COVID-19: 1) Ignoring the potential for more losses is not an option; 2) Innovation isn’t a “nice to have; it’s a necessity; 3) Homeowners will thank you for it; 4) At the end of this crazy period, new opportunities for lenders, servicers and homeowners alike will emerge.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
