Nicole Herold, Product Director at First American Data & Analytics, shares her thoughts on the growing interest in involuntary lien data and why it is critical for lenders, investors, energy efficient improvement contractors, and others to have access to this important data for daily business operations.
How many types of involuntary liens does First American Data & Analytics track?
First American Data & Analytics currently tracks 10 main categories of involuntary liens: including federal and state tax liens, judgments and mechanics liens as well as municipal and lower tax authority liens like sewer, garbage, fire district, and utilities.
We also collect and manage Homeowners Association (HOA) and Property Assessed Clean Energy (PACE) liens, two sub-categories that are critical for getting a complete picture of the financial health of a borrower and the debt burden on a property.
This year we’ve seen 1 million involuntary liens recorded in more than 2,000 counties that we cover, which represents 75% of the U.S. population. The number was significantly higher last year, in 2022, at 2.6 million. In addition to new lien filings, we also track lien releases to help shed light on the removal of debt. Year-to-date in 2023 that number is about 76,000, when compared to a year ago at more than 1.7 million.
Who is using this information and why do they need it?
There are a number of ways that a subject property could be in jeopardy or make it difficult for the owner to sell. So, this involuntary lien data is critical to a lender, servicer, investor, or reseller. They need to have full transparency to risk due to non-mortgage liens for loan due diligence as well as portfolio analysis and ongoing portfolio monitoring.
While risk is a major reason why customers need this data, there are also marketing opportunities using this data. For example, contractors would be interested in a list of homes with PACE liens that haven’t been fully utilized so they can offer additional energy efficient upgrades that can be funded by the existing PACE lien.
HOA data is a type of involuntary lien. Why does First American Data & Analytics manage it separately from other involuntary liens?
With more than 50% of properties in the U.S. being part of an HOA, First American Data & Analytics focused on collecting and managing HOA liens nearly a decade ago. We knew that these types of liens and their releases were critical and needed special attention. It also gave us the opportunity to use the data we collected off of HOA liens to improve our HOA contact data asset.
The risk from an HOA lien, especially in one of the 22 Super Lien states, is particularly important to manage. In mid-September, Bloomberg published an article describing how some HOAs have gotten aggressive about filing liens. One example of this aggressive behavior was a Denver-area home worth $580,000 that had a $6,600 lien filed against it for HOA fees and penalties. The homeowner failed to pay off the lien, so the HOA foreclosed on the property. At auction the house sold for just $85,000 and the lender did not recover the value of the outstanding balance, if any, of the mortgage.
Year to date, we’ve identified about 142,000 active HOA liens that have been recorded. That is a significant potential loss of assets if even half go to foreclosure.
How can customers access lien data from First American Data & Analytics?
We make it easy for end-users to get the information they need in the most consumable format. A few examples of how our customers use the data include:
- An investor doing due diligence for a Mortgage Servicing Rights (MSR) transaction can send us a UniqueID, address, city, state, and/or zip code as an input file and we can match and append the lien information they need to evaluate the risk.
- A loan servicer might opt to receive an “alert” that would fire when a lien is filed against a property in its portfolio as the result of that portfolio being monitored on a regular schedule.
- Contractors and equipment manufacturers with large-scale marketing programs for items like solar panels can get a list of properties based on specific filter criteria to target new prospects.
By working with First American Data & Analytics, our customers are assured that they are seeing the complete picture of a subject property to lower risk. They can save time by working with data that is current, complete, and covers 100% of U.S. housing stock.
For more information about our lien offerings, send an email to firstname.lastname@example.org and a member of our Data team will get in touch with you right away.