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Post by houstonsandy on Mar 14, 2019 5:50:31 GMT
I just got a notice from my mortgage company that my escrow account last year was "underfunded".....to the tune of over $9000.00! How the heck did they manage to do that!?!?! We had lost our house in a fire, and rebuilt. The rebuilt home is valued at more than the old one was....but not ridiculously so. A few months after we moved in, we refinanced with another lender. Shouldn't they have been responsible for making sure the escrow payments were going to cover the taxes when they did the refi and determined my mortgage payment? My choices are:
1. pay the amount of the negative balance ie: pull $9000.00 plus out of a hat and have my mortgage payments go up "only" by $500.00/mo or 2. pay it over the next 12 months which will increase my mortgage payment by $1300.00/mo. I was paying $1002.00/mo and that would increase it to $2300.00/mo! I am recently divorced and trying to live on my own and helping to support my dd in college with no help from my ex.
Luckily she has qualified for a grant and got enough scholarships to cover all of her tuition. However, there is still rent, living expenses and health insurance that I must cover. She can not work during the school year but will during the summer with an internship. (she is in an architecture program and has classes starting at 8am and then is in the studio working on projects till 2am most days). To make ends meet, in addition to my regular job, I have taken in three international students at a private high school that I get paid to host during the school year. Since I also work for a school, my paycheck takes a big hit in the summer months when my 40 hr work week goes down to 10, and I won't have the student hosting income for those months either. I could use my savings to pay the $9000.00, but it would take all of my savings to do that....and I am hesitant to do that so close to summer and the reduced income. Ugh....but if I don't pay it up front, I will have to dip into my savings to pay the extra mortgage amount for the next 12 months anyways. To top it off, I'm taking all my stuff to an accountant tomorrow to have my taxes done and I'm scared to death to find out what news that will bring after reading all the other stories on the board last week....
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Post by candleangie on Mar 14, 2019 5:58:51 GMT
Are you following up through an email or phone number they provided York you, or a number from your original records? There have been some very convincing scams along these lines recently
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Post by prettyprettypaper on Mar 14, 2019 6:09:17 GMT
Ask for a copy of the escrow analysis breakdown. It should show what they previously projected (and based their calculations on) compared to the new annual payment. It should show you exactly why you have such a huge shortage.
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Post by houstonsandy on Mar 14, 2019 6:12:39 GMT
I will be calling them to try and get an answer on how they screwed this up so badly. Its legit, though, since I was able to log into my online account on their website and view the correspondence. I am thinking that they just looked at the taxes we paid the year the house was being rebuilt (ie: based on the value of the land....without a house on it for most of that time!) and kept them the same without thinking that now that there is once again a structure to base the taxes on....it would be higher!
And yes....before someone points it out...I realize it was ultimately my responsibility to look and make sure my mortgage payments would be sufficient to pay all the taxes....but I'm new at this! Lesson learned the hard way! I trusted the lender to do their job and collect the right amount from me!
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lurkyloo
Full Member
Posts: 284
Dec 5, 2018 6:53:08 GMT
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Post by lurkyloo on Mar 14, 2019 6:13:08 GMT
Sounds fishy. If my escrow account wasn’t enough to pay the taxes, I first see it on the property tax bill that comes. Then I’ll get a notice from the mortgage lender. Did your property taxes reflect this crazy increase?
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Post by nlwilkins on Mar 14, 2019 6:37:29 GMT
Since they are partly responsible for the shortage by not doing their job correctly, I would request perhaps longer time to pay it off so you won't have such a huge increase. I say partly since it is on you also to check it all out. You should be getting statements about your escrow. It has been a while, but when we made house payments our escrow balance was always listed on the payment coupon. Then when the taxes came due, it would reflect that amount deductable along with the home owners insurance and other items deducted. Could they have not paid the taxes on time which would have given you a late fee? or perhpas there miight have been a big jump in the insurance. Or are you paying for the insurance yourself? Bottom line you need a statement which shows what is coming out of your escrow and what is going into it.
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Post by lauradrumm on Mar 14, 2019 8:36:21 GMT
If it turns out you do owe this what about paying half from your savings and half over next year?
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Post by littlemama on Mar 14, 2019 10:33:12 GMT
They cant legally keep more in escrow than the math allows. It is based on the prior year's value. You should have received a pretry substantial refund the year that the property had no house because too much would have been collected that year.
I'm actually more stunned that your property taxes are so high that you could even have a $9k shortage in addition to what you paid in. My total property taxes for one year might be 25% of that number at most.
Also, where I live, your property tax stmt would not state that your escrow was short- they have no idea because the mortgage company still pays it
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sweetpeasmom
Pearl Clutcher
Posts: 2,614 
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Post by sweetpeasmom on Mar 14, 2019 11:14:51 GMT
I will be calling them to try and get an answer on how they screwed this up so badly. Its legit, though, since I was able to log into my online account on their website and view the correspondence. I am thinking that they just looked at the taxes we paid the year the house was being rebuilt (ie: based on the value of the land....without a house on it for most of that time!) and kept them the same without thinking that now that there is once again a structure to base the taxes on....it would be higher!
And yes....before someone points it out...I realize it was ultimately my responsibility to look and make sure my mortgage payments would be sufficient to pay all the taxes....but I'm new at this! Lesson learned the hard way! I trusted the lender to do their job and collect the right amount from me!
This is EXACTLY what happened to us in 2007/2008. We built a house and when we converted from our construction loan to a regular loan, the taxes at the time were set based on the land value. They didn't take into account the dwelling on the property. We closed the loan in about February of 2008. I decided to log on to our account in Jan 2009 to see how much we had paid off. That's when I found out that our escrow was short $12,000!!! That included the difference of what they had accounted for as to the taxes and what it actually was. Plus what they were projected they needed for the upcoming year. They wanted it all paid in that year. DH was able to get them to spread it out over I think 3 years. So, I 100% feel your pain.
If they were short when they got the bill (meaning the mortgage co), then they are having to make that up. Plus they are projecting this year's tax bill in that as well. $4500 is high but not unheard of around here. You do make a good point about the tax bill that occurred during the time the house was not on the property.
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Post by lisacharlotte on Mar 14, 2019 11:47:26 GMT
I believe that happened to us once, but we were notified long before the year was up so we weren't short a whole year of taxes. It really is something you need to check for if you are living so close to paycheck to paycheck, but I can also see how you wouldn't even think to check something like that. It's an expensive lesson, but now you know going forward. I would make an appointment with the bank to discuss and see what can be worked out that is not going to cost you more money than you currently owe and request an extended repay period so you don't wipe out your savings.
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Post by littlemama on Mar 14, 2019 11:51:52 GMT
I will be calling them to try and get an answer on how they screwed this up so badly. Its legit, though, since I was able to log into my online account on their website and view the correspondence. I am thinking that they just looked at the taxes we paid the year the house was being rebuilt (ie: based on the value of the land....without a house on it for most of that time!) and kept them the same without thinking that now that there is once again a structure to base the taxes on....it would be higher!
And yes....before someone points it out...I realize it was ultimately my responsibility to look and make sure my mortgage payments would be sufficient to pay all the taxes....but I'm new at this! Lesson learned the hard way! I trusted the lender to do their job and collect the right amount from me!
This is EXACTLY what happened to us in 2007/2008. We built a house and when we converted from our construction loan to a regular loan, the taxes at the time were set based on the land value. They didn't take into account the dwelling on the property. We closed the loan in about February of 2008. I decided to log on to our account in Jan 2009 to see how much we had paid off. That's when I found out that our escrow was short $12,000!!! That included the difference of what they had accounted for as to the taxes and what it actually was. Plus what they were projected they needed for the upcoming year. They wanted it all paid in that year. DH was able to get them to spread it out over I think 3 years. So, I 100% feel your pain.
If they were short when they got the bill (meaning the mortgage co), then they are having to make that up. Plus they are projecting this year's tax bill in that as well. $4500 is high but not unheard of around here. You do make a good point about the tax bill that occurred during the time the house was not on the property.
"pay the amount of the negative balance ie: pull $9000.00 plus out of a hat and have my mortgage payments go up "only" by $500.00/mo or"
The $9K is just the shortage for the one year. The increase of $500/month is to project for this year's tax bill. She said if she didn't pay the $9K outright, her mortgage payments would go up $1300/month.
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Kerri W
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Posts: 3,776
Location: Kentucky
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Post by Kerri W on Mar 14, 2019 12:20:26 GMT
It’s an unfortunate situation for sure and just simply sucks. This happened to us after the first year of our mortgage. The first tax bill was figured on an empty lot and the new year was figured on a completed structure leaving us quite short in escrow. It isn’t uncommon and isn’t because the lender has done something wrong. They can’t collect on blue sky.
It would be wonderful to help your DD. But the fact is, you don’t have to, you are choosing to. Is there a chance you could get a job over the summer to build your savings back up?
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Julie W
Drama Llama
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Post by Julie W on Mar 14, 2019 12:43:44 GMT
Lie others have said, your mortgage servicer cannot project what your next tax bill will be, especially with your unique situation where the value went up - they have no way of knowing. They can only analyze the tax bill that is presented to them and make the adjustments. They can't collect more than the state-specified cushion, usually no more than 2 months of escrow payments, or they will be in violation of RESPA, real estate laws.
That being said if you don't feel you can pay it now, you can ask for the shortage to be spread over a period time longer than 12 months - though it will certainly affect your monthly payments longer.
Good luck!
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smcast
Drama Llama
Posts: 5,370
Location: MN
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Post by smcast on Mar 14, 2019 14:06:20 GMT
Wow! That's a lot! I'm sorry.
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smartypants71
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Posts: 5,748
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Post by smartypants71 on Mar 14, 2019 14:10:30 GMT
I had something similar happen to me except it was a mistake made by my mortgage broker. My mortgage company was great. They offered to spread it out over 3 years. It was much easier to just pay it off though and keep my payment the same. My mortgage broker felt pretty bad about it. He's a friend of mine, but I was pissed. He ended up buying me a year of my homeowners insurance.
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likescarrots
Pearl Clutcher
Posts: 2,879
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Post by likescarrots on Mar 14, 2019 14:59:31 GMT
It sounds like you can't afford the house. If the escrow shortage is going to take up all of your savings, and your mortgage payment is still going up 500/month, how will you rebuild your savings? It sucks and I do commiserate, I also live in a town with insane property taxes. We can afford to buy a house, even with the taxes, but for houses we are interested in, the property tax alone will be more than what we pay in rent, so it's not worth it.
That being said, you should think carefully about whether it not you should sell the property.
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Post by **GypsyGirl** on Mar 14, 2019 15:07:01 GMT
We had something similar happen when we changed mortgage companies over 10 years ago. Ever since then I have held my own escrow account. I pay just principle & interest to the mortgage holder, then set aside money in a savings account each month for escrow costs (taxes and insurance). houstonsandy - are you using one of the firms that protests property tax increases each year? Won't help with this situation, but with the new house you need to get them to lower your value as much as possible. I'm actually more stunned that your property taxes are so high that you could even have a $9k shortage in addition to what you paid in. My total property taxes for one year might be 25% of that number at most. Welcome to Texas, land of no state income tax but high property taxes instead. Property taxes are high here. They also increase on a yearly basis, up to 10% each year. I'm pretty sure the OP lives in my county and they do increase the taxes the maximum 10% each year. It's why we remodeled rather than tear down and build new. A remodel allowed us to keep our original tax base (we bought in 1991). It was a big savings in taxes. |
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basketdiva
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Post by basketdiva on Mar 14, 2019 15:11:02 GMT
When you applied for mortgage, the bank used the tax bill that was available at the time. They can't just make up a new number-they have to use whatever number the county issues for your property. My escrow account goes up and down based on new insurance rates and new property taxes. Sometimes it takes several months to catch up to me due to the dates of the escrow audit and the dates of property tax bills.
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keithurbanlovinpea
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Post by keithurbanlovinpea on Mar 14, 2019 15:11:51 GMT
I work in mortgage servicing and escrow is one of my areas of expertise. I'm happy to look at it if you want.
But yes, the land only value vs the improved value gets a lot of people. Good originators will estimate the improved value and set up an escrow payment that is more correct the first year but after that the servicer can only create an escrow payment based on real bills. Legally they cannot bill for more. You can opt to put more money into your escrow account (or save it yourself each month and pay the shortage as they occur) but they can't make your escrow payment higher just because they see a land only value on your tax bill
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