Property tax loans rise despite risks

A growing number of Texans struggling with delinquent property taxes are turning to risky tax loans even as the state attempts to crack down on the lenders.

Consumers who use property tax loans risk losing their homes if they default on even a small loan. Fees can run into thousands of dollars, and interest rates top out at 18 percent.

"They are the payday lenders for property taxes," said Robert Doggett, an attorney with the Texas Low Income Housing Information Service, referring to the quick-cash loans issued by storefront lenders at often exorbitant interest rates.

An estimated $100 million in taxes was paid to local governments in Texas last year through the loans.

Tax lenders receive the tax lien on the homeowner's property from the county or school district as part of the loan agreement. read more