Hawaii property tax exemption and Wells Fargo

[terracore]

I'm not surprised that my loan was sold (all three of the mortgages I've had were sold, some of them more than once).

I did not do a good job of communicating my point, so I will try it again. If you qualify for a Hawaii property tax exemption, after it kicks in you should check to see that the bank is withholding the proper amount in escrow for the property tax. In my case, they jacked the escrow amount up literally hours before the new tax rate went into effect when what they should have done was lower it. Had I not been watching for this sleazy tactic I would have given the bank an interest-free four digit loan for a year. Personally, I would prefer to use that money to lower my principal.

[whtviper1]

I'm sure that happens all time whether it is Wells Fargo or not.

[mdand3boys]

Originally Posted by whtviper1

I'm sure that happens all time whether it is Wells Fargo or not.

Ding !

How is the bank supposed to know that you are suddenly going to qualify for some sort of exemption that will dramatically lower your property tax rate?

[hotzcatz]

They automatically make up an escrow account for the taxes and insurance, even if you don't want them to. We just did a refi and we've been paying our insurance and taxes separately so we could use the extra $$ each month to pay down the principal. Now, however, they suck that extra amount over to an escrow account to hold it for our taxes and insurance. We already had the homeowner's rate, though, so they are only taking the lower amount.

The fellow making out the loan said it could be changed after the loan was in place. Trying to get them to change it is very difficult, though.

[oregonwoodsmoke]

I've always just asked for a mortgage where taxes and insurance are not escrowed. It costs an extra quarter percent on the interest rate, but I don't have to put up with any possible mismanagement on their part.

If you agree to an escrow at the time you take out the mortgage, it is very unlikely that they will change the terms. For one thing, you probably have a lower interest rate with the mortgage that comes with an escrow.

Escrow accounts can fluctuate greatly, as the bank tries to anticipate what the new tax rate will be next year and how much the insurance goes up. Add that to the fact that big banks are huge and the left hand never knows what the right hand is doing, and I would simply prefer to save up the insurance and the taxes in my own account.

(I don't know for sure, but it is possible that people with marginal credit can not have the mortgage without escrow. It's all about bank risk and the escrow lowers the bank's risk)

[terracore]

Originally Posted by mdand3boys

Ding !

How is the bank supposed to know that you are suddenly going to qualify for some sort of exemption that will dramatically lower your property tax rate?

Maybe because nearly all Hawaii island mortgages qualify for the exemption? Or maybe because the new property tax amount was available to the bank two months before they jacked up escrow? Or maybe perhaps because they jacked it up hours before the new rate went into effect?

And agreed, I'm sure all banks are guilty of this practice as it applies to situations all over the country. Holding onto a few thousands of my dollars isn't going to make the bank rich, but do it several million times each year, and that is a lot of money (billions? trillions?) the banks gets to use without paying anybody any interest. The only bigger scam out there is private mortgage insurance.

[whtviper1]

Originally Posted by terracore

The only bigger scam out there is private mortgage insurance.

Why do you think it is a scam - it is easily avoidable with 20% down.

[Mikala43]

Originally Posted by whtviper1

Why do you think it is a scam - it is easily avoidable with 20% down.

That's what I was thinking.

A scam is when someone tries to trick you, not hand you 10 pages of disclosure information.