Escrow and house insurance

[C_Felix]

I don't know if "I have a problem" is okay on these boards...but...

The wife and I did that making homes affordable thingy. (I lost my job and went from $40,000 to $19,000.) Payments went from $1256 to $948.

Point is, escrow for taxes and house insurance wasn't being taken out. I don't have the letter infront of me; the one that informed us that escrow wasn't being taken out, so I don't know the exact language. I highly doubt they put in a sentence like, "We messed up..."...but...it seems like they did since it wasn't being taken out.

Well...am I just effed?
Is there anything I can do?

[Careyp74]

So, to be a little more clear.....

You refinanced your mortgage, and the first mortgage had escrow deposits, while the new one doesn't? And now they are telling you that you need to make a big payment to catch up?

ETA: If that is the case, you should be able to work with them to adjust the payments and get back on track, without having to pay one giant lump sum. Afterall, it was their fault. They will probably require you to pay any taxes or insurance that are due though.

How long have you had this new loan, that it took so long to catch this mistake, and cause such a problem?

[C_Felix]

They didn't specifically state that we had to pony all of it up at once.
I'm at work at don't have the letter with me, so the exact language....well, I don't what it is.

We've been with this new payment for maybe a year.

[Careyp74]

wow, so you haven't paid insurance or taxes in a year, and no one caught this? Although they must have made a mistake and never started the escrow, I would say you still have to pay the taxes and insurances. Have they been paying them all this time?

My advice would be to call them first, and find out why they haven't been collecting, and if they have been paying the taxes and insurances. If they have been, maybe you could work out a deal with them where you pay maybe double the escrow amount for a year. They are a loan company after all, and they did screw up. If they don't agree to something like that, and want a full payment, talk to a lawyer.

[MRC_Hans]

They didn't specifically state that we had to pony all of it up at once.
I'm at work at don't have the letter with me, so the exact language....well, I don't what it is.

We've been with this new payment for maybe a year.Well, congratulations with getting a new job. I have no idea what it all means as the system is quite different in my neck of the woods, but essentially, work stuff out with them. You can pay, and generally nobody wants to pull the rug from someone who can, eventually, pay up.

Hans

[C_Felix]

wow, so you haven't paid insurance or taxes in a year, and no one caught this? Although they must have made a mistake and never started the escrow, I would say you still have to pay the taxes and insurances. Have they been paying them all this time?

My advice would be to call them first, and find out why they haven't been collecting, and if they have been paying the taxes and insurances. If they have been, maybe you could work out a deal with them where you pay maybe double the escrow amount for a year. They are a loan company after all, and they did screw up. If they don't agree to something like that, and want a full payment, talk to a lawyer.

I was curious about that.
The way I mentioned it to my wife was thusly:
We have a contract with them. They are to do X, Y, Z and we do A, B, C.
They didn't do X & Y, which puts us in an unteniable position. Should we be responsible.

I'll dig up the letter when I go home...and I'll keep you guys posted.

(I know...real nail biter, huh?!)

[Careyp74]

I was curious about that.
The way I mentioned it to my wife was thusly:
We have a contract with them. They are to do X, Y, Z and we do A, B, C.
They didn't do X & Y, which puts us in an unteniable position. Should we be responsible.

I'll dig up the letter when I go home...and I'll keep you guys posted.

(I know...real nail biter, huh?!)

Yes, in a way, you have a contract with them, but that is the loan, not a specific contract saying that they will collect escrow and pay taxes and insurances. They are bound by laws to do that, not any agreement between you and the bank. An argument could be made that it is still your responsibility to make sure the payments were being made. I know exactly how much is in escrow each month, and what payments are coming up.

A lawyer will help sort out responsibilities and help explain what can be done, however I would not look into litigation unless all other means have been exhausted. First thing is establishing communication with the bank.

[Number Six]

My guess is that while you probably have to pay back insurance, you definitely have to pay back taxes. And maybe even some kind of penalty, although maybe the escrow company would be responsible for that part of it since they screwed up. Hell will freeze over before you can get out of paying your taxes just because the escrow company screwed up.

[mactonite]

Unfortunately taxes and insurance is something we all must pay. No matter if the mortgage company collects it, or if we pay it on our own. Mortgage companies will offer escrow(or impound) accounts as a privilege. The best thing to do is to see how far they can stretch the escrow shortage out to make the increase in payment as minimal as possible. I am pretty sure they can stretch it over a couple of years. Try to work with them on it.

[Loss Leader]

I was curious about that.
The way I mentioned it to my wife was thusly:
We have a contract with them. They are to do X, Y, Z and we do A, B, C.
They didn't do X & Y, which puts us in an unteniable position. Should we be responsible.

I'll dig up the letter when I go home...and I'll keep you guys posted.

(I know...real nail biter, huh?!)



The answer is that your position hasn't changed. And it hasn't becoome untenable. Escrow goes to pay your real estate taxes. You always had the obligation to pay your real estate taxes. That never changed.

Now, one of two things happened. 1) The mortgage company didn't take out money for your taxes, and hasn't paid them. In that case, you owe the government your taxes. You have to pay them all at once, but most municipalities will probably let you work out some sort of payment plan rather than sue you and go through all that. So, if your tax bill is now due and you are responsible for it, call the receiver of taxes and tell her you don't have the money. Along with the municipality's attorney's office, they'll help you work something out. But remember that you'll still have to save for next year's taxes at the same time.

2) The mortgage company didn't take out money for your taxes, but went ahead and paid them for you anyway. In this case, the mortgage company will let you either pay back in one lump sum or just add 1/12th to your monthly bill. At the same time, they'll be collecting 1/12th of next year's taxes so they have enough to pay the tax bill next year. You might be able to convince the mortgage company not to escrow your taxes, so you'll only pay them back the money they fronted you. However, next year, you're still going to have to pay the same tax bill. You're mortgage company may insist on escrowing the taxes.

In both cases, you pay the same exact amount of money. You pay the total in the exact same amount of time. The only thing that might differ is whether you have to pay it monthly or whether you can save some of it up and pay it at once.


IAAL