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Refinance Business from New Subdivisions.
Get Refi's from new subdivisions with one simple letter.
Written By: Karen Deis
A loan officer shared with me his secret to getting refinance business from new subdivisions.
Then, it just happened to a friend of mine!
Here's a simple way to get refinance business due to tax escrow shortages! And a huge opportunity for you to close a couple of extra loans a month!
Let's start at the beginning...
If you are not familiar with how property taxes are assessed on brand new homes - here's how it usually works:
The assessed value of the property is based on the value of the lot (before the home was built). When a home is built on a lot, it could take the assessor's office anywhere from 3 months to 1 year to re-assess the value of the property after a house has been added to the land.
At the closing table - when the mortgage payment for the new home is calculated, the escrow payment for property taxes are based upon the value of the land only (since the property had not been assessed yet). Plus, according to RESPA and the servicing rules, there cannot be an excessive amount of money withheld in an escrow account or the money has to be refunded to the customer.
Back to the property taxes! Anywhere from a few months to 1 year, the home owner receives an "assessment notice" from the Assessor's Office - letting them know the new tax-assessed value of the brand new home - but it will NOT give them how much their taxes will increase. Unfortunately (for them) they just file it away and do nothing with it until one day, they get the dreaded...
...Escrow Shortage Letter!
An escrow shortage letter means that the client's new property tax bill has been paid, but there is not enough money in the escrow account to pay the huge hike in taxes, so now they have to make up not only the dollar amount that was advanced by the mortgage company, but also an increase to pay next year's taxes.
In short, it's a double whammy for the customer.
Here's a simple system on how to get the names and addresses of those who have recently built a home and a sample letter you can send to them soliciting refinance business.
You will also find a few tips on how to discuss the "escrow shortage" problem with potential clients.
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