Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Location: Stuck on the East Coast, hoping to head West
4,640 posts, read 11,930,296 times
Reputation: 9885
Advertisements
Does anyone have any tips with dealing with banks that are collecting too much money in escrow?
Long story, but I changed homeowners insurance policies and saved $400 a year. Trouble is my lender paid both policies (as a "courtesy" to me). So I call them up to see what the balance is in escrow because I have a property tax payment due out of it in July. They tell me no worries because I had well over several hundred extra dollars in escrow (!!).
Based on my research, there is a federal law that states they are allowed to have a cushion of only 1/6th of the anticipated taxes and homeowners insurance. My lender is collecting well above that figure each month from my mortgage payment.
My question is what is the best way to fight the bank on this? I'm collecting numbers right now: annual taxes and insurance and monthly p & i, but no way am I paying more per month than I have to.
Incidentally, I've got about 60% equity in my house and my credit score is 788---if that should have anything to do with it.
What does your mortgage contract say about escrow? That should give you information on how they determine the amount they'll collect and how you can get it changed.
They will reconcile your escrow account at the end of each year and make the necessary adjustments. If they have too much at that time they will mail you a check and lower your monthly payment.
They will reconcile your escrow account at the end of each year and make the necessary adjustments. If they have too much at that time they will mail you a check and lower your monthly payment.
Call your mortgage company and see if you can close your escrow account. I recently closed mine because I too changed my policy and the new escrow analysis would have upped our payments when I reduced the cost (they paid the higher amount). Their only restriction was you couldn't close your account if you have PMI. It got me back an additional $500 beyond what they were collecting for taxes and insurance. All went into a savings account earning me interest.
Thanks for the tip, akck. I'm going to check into that. I just can't see lending the bank my $ interest-free.
They pay you interest on the escrow. Check your year-end statement or your 1098. They will return your excess without you asking for it. It's just a matter of when. Some banks provide an escrow analysis, some don't, but they can't legally keep it.
Location: Stuck on the East Coast, hoping to head West
4,640 posts, read 11,930,296 times
Reputation: 9885
Quote:
Originally Posted by bibit612
They pay you interest on the escrow. Check your year-end statement or your 1098. They will return your excess without you asking for it. It's just a matter of when. Some banks provide an escrow analysis, some don't, but they can't legally keep it.
Actually, they don't have to pay you interest on it. That's the part the drives me crazy. In essence, lenders can change your mortgage payment at will (because there isn't really any one agency that has the authority to penalize them for it) and they can keep the money and not pay interest--unless state law mandates it and few states do. I never realized this and now that I do, I'm going over all of my mortgage statements with a fine tooth comb. At the very least, I could have applied that money towards the principal on my mortgage as opposed to letting my lender make money from it.
From Hud's website HUD RESPA FAQs by Consumers about Escrow Accounts (http://www.hud.gov/offices/hsg/sfh/res/respafaq.cfm - broken link)
Can HUD require lenders to pay interest on escrow accounts?
"NO. In 1992 and 1993, legislation was introduced in Congress that would have required lenders to pay interest on escrow account balances, but it never passed. Some states do require interest to be paid on escrow account funds, but many do not."
Location: When the people find that they can vote themselves money, that will herald the end of the republic
1,132 posts, read 2,103,683 times
Reputation: 1018
My suggestion - call the mortgage company and close the escrow account.
I did it long time ago and currently paying myself real estate taxes (4 times a year) and home insurance premium also.
Good luck
They should be sending you a check of the overage............unless your not current on your mortgage.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
