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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 24 June 2025 S P O N S O R E D C O N T E N T The NRBA also found that rapidly rising (and sometimes inaccurate- ly reported) property taxes are also compounding the problem, Nationally, property taxes have risen nearly 11% in the last three years—and in some markets by over 25%. Half of Escrow Fallouts Can Be Prevented W e estimate that half of all escrow fallouts can be easily prevented by requiring more specific information upfront in the buyer's prequalification letter and then matching the costs. This includes: • A detailed PITI breakdown that outlines monthly principal, interest, property taxes, and homeowner's insurance. • A homeowner's insurance quote that aligns with the expected cost and en- sures that the total monthly payment will still allow the buyer to qualify for the loan. • Verifying the correct property taxes well before closing It's a simple solution we've discussed with many REO clients and NRBA members, and it can be implemented at minimal cost. The solution: update MLS listings to require that all pre-qualifica- tion letters include these specific details and the matching information. When real estate agents and REO sellers require that prequalification letters explicitly include a PITI break- down, matching homeowner's insurance quote, and an updated property tax bill, they eliminate the chance of last-minute surprises. This ensures that buyers will still qualify for the loan when they reach the closing table, significantly reducing the risk of contract fallouts. Why the Solution Works B y ensuring that all parties—buyers, lenders, and agents—are on the same page regarding total monthly payment obligations, the risk of a trans- action falling apart due to insurance-re- lated issues is significantly reduced. Early and transparent communication is key to closing transactions smoothly and efficiently. For buyers, knowing their full monthly payment obligations upfront provides them with the confidence to proceed. For lenders, issuing a more detailed prequalification letter ensures that they have properly assessed the buyer's ability to repay the loan, con- sidering all factors. For agents and REO sellers, having this level of detail upfront allows them to evaluate whether an offer is truly viable before they accept it—thus reducing the likelihood of a deal falling apart at the last minute. The Cost of Contract Fallouts C ontract fallouts are not only frustrating, they're also costly. For buyers, they can lead to wasted time and emotional strain as they watch a deal slip through their fingers. For agents and lenders, the financial costs are also substantial, including the expense of re-marketing the property, re-engaging buyers, and the time spent revisiting the entire approval process. For sellers—especially those in REO situations—the consequences of con- tract fallouts can be even more severe. A failed transaction often delays the sale of a property, leading to longer holding costs, including taxes, utilities, and maintenance fees. Additionally, for REO sellers, there is the added challenge of market fluctuations that may affect the property's sale price, potentially leading to even greater financial loss. A Free Tool to Help REO Sellers, Buyers, and Agents Avoid Surprises T o assist buyers and agents in getting accurate homeowner's insurance quotes early in the process, House Karma offers a free quoting tool that aggregates real-time quotes from more than 100 carriers. The tool provided by Acrisure is available without obligation or cost and can be used by anyone, whether they're working with House Karma or not. This service can help buyers and agents compare rates and ensure that the homeowner's insurance premium aligns with the prequalifica- tion letter's estimates, helping to avoid costly surprises at closing. By using this tool early in the pro- cess, buyers and agents can better bud- get and plan, ensuring that the transac- tion remains on track and increasing the likelihood of a successful closing. Conclusion: A Simple Step to Prevent Transaction Failures T he issue of escrow fallouts is an urgent one, but the solution is straightforward. Requiring that prequal- ification letters include a detailed PITI breakdown and a matching homeown- er's insurance quote can help prevent many contract fallouts, particularly those that occur in the final stages of the transaction. For REO sellers and agents, includ- ing specific verbiage in the MLS to en- sure these details are provided upfront will likely prevent many of the costly issues that occur at the closing table. In a market where transaction delays are costly and stressful, this simple step could save significant time, money, and frustration. Members of the National REO Bro- kers Association (NRBA.com) are happy to implement these practices with the consent of the REO client. House Karma is committed to out- reach and providing useful information to create homeownership opportunities for challenged buyers, and we encour- age all real estate professionals to take advantage of our free quoting system, and other tools and make these changes a standard practice for a smoother, more predictable closing process. housekar- ma.us.