What responsibility does a loan servicer have regarding tax payments?

A loan servicer's primary responsibility concerning tax payments is to pay them directly for the borrower. This typically occurs when a borrower has an escrow account set up as part of their mortgage agreement. In such cases, the loan servicer collects monthly payments from the borrower, which includes amounts designated for property taxes. The servicer then uses these funds to pay the property taxes on behalf of the borrower when they are due. This practice helps ensure that taxes are paid on time, thereby reducing the risk of tax penalties or foreclosure due to unpaid property taxes.

While informing the borrower about payment deadlines can be part of good customer service, it is not the main responsibility of the loan servicer in relation to tax payments. Collection of taxes or deferring payments is not a standard role for loan servicers under most mortgage agreements, as the expectation is typically for the servicer to manage these payments proactively.