Why do lenders have to collect my property taxes?
Some lenders require payment of property taxes with the mortgage payment to ensure they are paid up to date. The city or municipality has the ability to place a caveat on the title of the property to collect arrears. This compromises the security position of the first mortgage and lenders are not comfortable with this. Not all lenders require this and many will allow you to pay your taxes directly on an annual or on a municipal monthly payment plan.