FWIW, I have seen lenders paying taxes on properties they have not yet even filed a NOD on but which have been in default more than a year. These particular loans had impounds (which may or may not have sufficient funds to pay taxes/ins prems) and the lender fully intends on foreclosing in the future if the trustor does not qualify for a permanent loan modification. The lender, in these instances, is trying to avoid the 10% penalty (in CA) for paying the taxes late. In these cases, the lenders very likely believe they will end up with these properties.
