Clarification of Property Tax Exemption

July 26, 2018

Please note the following clarification to the Property Tax Exemption Client Announcement posted July 3, 2018.

 

The clarification below applies to Texas properties:

 

  • Veterans can qualify with a PITI that excludes property taxes when Veterans is 100% disabled. This can be documented with:
    • VA Verification of Benefits showing:  Service-connected disability, combined service-connected evaluation, and disabled due to service-connected disabilities; and/or
    • Disability awards letter evidencing the Veteran is 100% disabled.
  • Proof from the applicable county tax authority is not required for loans in Texas, the Texas Tax Code Section 11.13, 11.26 covers this.
  • Seller prorated collected property taxes on the Closing Disclosure must be paid to the County Tax Office at closing or deposited into the borrower’s escrow account.
    • Typically loans closing in October, November or December can be paid to the County Tax Office as the tax bill can be obtained.
    • For loans closing January through September, the tax bill typically is not obtainable so the seller prorated collected property taxes should be placed in the escrow account.
  • Show the seller prorated collected property taxes on the Closing Disclosure page 2, Section F or Section H.  Gateway will add this amount into the escrow setup that shows on the purchase advice. Hence, be sure your title instructions states for title to send those funds to you versus Gateway.
  • Borrower Payment letters can show PITI that excludes property taxes for 100% disabled Veterans.  Gateway will require “County Tax Exemption approval for the individual Veteran” prior to Gateway purchasing the loan.  This may extend your purchase times, however, typically a Veteran should be able to obtain the documentation within a week of closing.

 

The policy posted July 3, 2018 was effective immediately.  We understand, you may have loans already in process and/or closed and need to use a borrower signed Tax Exemption Waiver detailing the borrower responsibilities.  Exception requests can be escalated to your Client Liaison for an exception to allow the Tax Exemption Waiver.  Loans closing August 1, 2018 and later must meet the guidelines above.

 

*It is important for 100% disabled qualifying Veterans to file a timely property tax exemption after closing to avoid paying existing Seller property taxes.

 

Please direct any questions to your Regional Sales Manager

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