Defending the property tax loan industry
This article was originally published by the Houston Chronicle.
By Red McCombs
March 11, 2013
I opened my first car dealership at age 25, and I’ve been blessed over the last 60 years to be part of many more entrepreneurial ventures. One business I’m particularly proud to have helped start is Propel Financial Services, which provides property tax loans to home and business owners in Texas.
In a property tax loan, also known as a tax lien transfer, a property owner authorizes a third-party like Propel to pay his or her property taxes. The property owner may need a little help paying because of a short-term financial difficulty like unexpected medical bills or a child’s college tuition. Propel then pays the full amount due directly to the tax-collecting entity, and the tax lien is transferred to the company. The property owner then works out a flexible payment schedule with Propel.
For example, there’s a couple in Fort Worth who are both school teachers. The husband had three surgeries, and his wife had one, leaving them with a pile of hospital bills. This temporary difficulty made it tough for them to pay their annual property tax obligation, but through a property tax loan, they were able to keep their family in their home and pay off the tax burden in a more manageable timeframe that allowed their bodies and their bank accounts to heal. And there are 15,000 Texans just like them who take advantage of this service each year.
Of course, property tax loans are great for property owners who are able to take advantage of an alternative method of paying their property tax bills, but they’re also great for our local governments, because these transfers result in the instant collection of revenue that funds important public services such as schools and public safety. In fact, $500 million in Texas property tax revenues have been funded through property tax loans in the last three years alone. And the tax assessors also realize property tax loans keep property owners in their homes, which also helps local governments.
There are about 70 other homegrown businesses like Propel around our state that provide property owners with this flexible, affordable solution. But now, some banks and collection law firms want to shut down the industry through legislative changes, such as changing the lien priority of these property tax loans. It may not sound like much, but that one change would effectively kill the entire industry, eliminating this option for Texas property owners and taking those 70 businesses and the jobs they sustain with it.
Why is that? Well, it’s because this industry couldn’t exist without the priority lien position. No one will provide financing for these delinquent property tax loans without it. I never in a thousand years would have funded this business with my hard-earned money without the lien priority. Anyone with a basic understanding of business or credit risk will look at the facts and realize this industry wouldn’t exist without it.
So why do these special interest firms want to take that away? I have no idea, except maybe greed.
We shouldn’t sit back and watch as special interest groups put a bullseye on a valuable industry that’s been an option for property owners for 80 years. And I’m not the only one who feels that way – customers have voiced their opinions, too. Property owners who have worked with Propel have given the company a whopping 98.6 percent satisfaction rating. That’s the highest I’ve ever seen in all my years in business on any product.
This is a service that shouldn’t be shut down by the greed of others. That’s just plain wrong for Texas. I urge our lawmakers to preserve the viability of the property tax loan industry. Let consumers decide who wins and loses in this business.
McCombs is founder of McCombs Enterprises, parent company of Red McCombs‘ auto dealerships and other interests. In 2007, he co-founded Propel Financial Services LLC, which was acquired last year by San Diego-based Encore Capital Group Inc.