View Full Version : Escrow Shortage Causing $600 Increase in Mortgage Payment?!
Hi there. I got a letter in the mail today saying because of changes in my property taxes or my insurance, I have an escrow shortage of $4,435 and so my mortgage payment will be increased by $600 for a year. I'm pretty freaked out about this and wondering if someone made a serious miscalculation when I refinanced our house last year. Is this typical? It seems like a pretty dramatic change. The first year we were in the house there was an escrow surplus, and I got a big check at some point. I will, of course, follow up with the property tax and insurance people, but I wonder if others have experience with this. Also, I no longer am able to hit return when I write messages on this board to start a new paragraph, and it's driving me crazy. Has anybody else had that problem?
ejchase, I would seriously question those numbers -- it sounds as though an amount wasn't properly applied in the refi or something wasn't right. Did they provide you a month-by-month so you can see? Can you phone the mortgage company and ask them to explain why this is so high? I may be wrong, but I personally don't think this is anything like normal.
Yes, after a teeny bit of internet research, I'm realizing a mistake was made somewhere - probably in the refi - and I'm going to have to spend some time tracking it down. I hate dealing with this kind of stuff but - deep breath! - I'll just take it one step at a time and try to get to the bottom of it.
The only time I experienced that was when I bought a new house, and the property taxes hadn't been calculated by the county at the time of purchase for an improved property. During the next year the full amount was applied and we received a similar letter from the mortgage company.
Also, I no longer am able to hit return when I write messages on this board to start a new paragraph, and it's driving me crazy. Has anybody else had that problem?
There is a problem which pops up now and then with Microsoft's Internet Explorer, versions 9 & 10. There are several ways to solve it, one being to look up to your address bar and click on the little icon that looks like a ripped piece of paper. That icon forces the browser to enter 'compatibility view' mode which should solve your problem. If the icon is grayed, you are not in compatibility mode, if it is blue, you are.
The other solution is to use Chrome or Firefox as your primary browser.
The only time that happened to me during a re-fi they got the house insurance account number wrong and it wasn't being applied correctly. Hope you can find the problem quickly and that it balances out and doesn't leave you with that big bill all year.
We receive a property-tax statement from the county each year for each of our properties, even though we escrow for one and not the other. The swing in numbers can be sizable, though never to the degree the OP experienced. But at least there's documentation of what is being charged.
The first step would be to look up your property on your county's auditor page and see what your actual taxes are and when were you last current.
Deep breaths! Then you need to figure out how much of the increase is for the current taxes and how much is to catch you up. This is going to involve a lot of legwork and frustrations! I am sending you (((HUGS)))
Thanks so much to all of you for your support. I've had a bunch of stressful work-related stuff over the last 7 days, so have just been completely avoiding facing this. But today, I set a timer for an hour and told myself "You are just going to spend one hour trying to figure this out and then you can avoid it again if you need to."
At the suggestion of the title company, I called the county assessors office, and here is what I found out: In 2011, I had to pay supplemental taxes to account for the amount our house increased in value between January 1, 2011 (when it was valued at the price the previous owners paid for it) and when we bought it in February 2011. Because the previous owners did a major overhaul, the previous value was much, much lower than the purchase price we paid, so I paid quite a bit in supplemental taxes, which I was assured was a one-time fee. When the escrow company estimated the future taxes during the refi, however, they looked only at the taxes that were paid on the previous valuation of the house and did not take into account the supplemental taxes and the new, much higher value of the home. Instead, they estimated my 2012 taxes based on the home being valued at the previous much lower value, not on its current value.
So ... my next question is, since this seems to be a mistake on the title company's part, isn't it fair for me to ask them to pay for some or all of this shortage? Or perhaps even more since the result of all this is that, even after the shortage is paid, my monthly payment is still going up $200?
As soon as I typed this whole explanation into an email to my former mortgage broker, the timer went off. After all my worry, I was actually able to more or less get to the bottom of it in exactly an hour. I was sure it was going to be take me hours and hours just to find out the cause.
Is the company providing the escrow different than your mortgage lender? You mentioned a title company, but I would be surprised that this involves title unless escrow is another service they provide.
And while you could ask, I think they'll find the most polite way they can to tell you this is your problem. I would guess that, somewhere in all the paperwork you received in the refi, there's language that excuses the lender/escrow company from errors like this. Property values go up and down all the time, it seems, and whoever is doing the escrow should be on top of it enough to give you an accurate figure. It sounds like your 2012 valuation makes the additional $200 one of those kinds of adjustments. And it would have happened even if you didn't escrow.
I'm sorry I don't think there's better news. The best you might hope for, after doing the math, is determining that an additional $200 will result in a lot of excess in escrow; maybe you could negotiate that down to $150 or so to better match the property tax disbursement for the other payment(s) in 2012.
Is the company providing the escrow different than your mortgage lender? You mentioned a title company, but I would be surprised that this involves title unless escrow is another service they provide.
And while you could ask, I think they'll find the most polite way they can to tell you this is your problem. I would guess that, somewhere in all the paperwork you received in the refi, there's language that excuses the lender/escrow company from errors like this. Property values go up and down all the time, it seems, and whoever is doing the escrow should be on top of it enough to give you an accurate figure. It sounds like your 2012 valuation makes the additional $200 one of those kinds of adjustments. And it would have happened even if you didn't escrow.
I'm sorry I don't think there's better news. The best you might hope for, after doing the math, is determining that an additional $200 will result in a lot of excess in escrow; maybe you could negotiate that down to $150 or so to better match the property tax disbursement for the other payment(s) in 2012.
The thing is though that the value of my house hasn't changed one dollar since the refi. They simply listed the wrong figures for my 2011 taxes by forgetting to include the supplemental taxes.
The thing is though that the value of my house hasn't changed one dollar since the refi. They simply listed the wrong figures for my 2011 taxes by forgetting to include the supplemental taxes.
However the number changed, it remains that the house has a higher assessed value than it had in 2011. And I will guarantee that whoever is managing escrow has language in their contract with you that excuses them from this kind of oversight.
As I said, asking is free. But I'm guessing they won't be on the hook for this and they will not be willing to accommodate.
I've never had an escrow account with my mortgages so forgive me if this is too simplistic.
Don't you get statements from your home owners insurance and property tax every year? Wouldn't the total of the two annual costs, divided by 12 be the amount that would be added to your mortgage payment (P&I) each month? Maybe they add a buffer of $50 a month or so, but I would think that would help you to determine how much your monthly payment should be....or within a range, anyway.
Of course any supplemental taxes as the OP mentioned would be in addition to that calculated payment, but I've rarely had supplemental taxes over the years I had mortgages.
I sure have read about a lot of escrow account problems people have had. Do the banks really screw up that much? I'm glad I never had one. They didn't have them when I bought my first house back in the 70s. We had to put 20% down and save monthly for the taxes and insurance. We had all the control then; now the banks have it.
However the number changed, it remains that the house has a higher assessed value than it had in 2011. And I will guarantee that whoever is managing escrow has language in their contract with you that excuses them from this kind of oversight.
As I said, asking is free. But I'm guessing they won't be on the hook for this and they will not be willing to accommodate.
Actually the assessed value of the home is exactly the same as it was in 2011 when we purchased it, and the taxes are roughly the same. The escrow/title company put the wrong number in the box that said 2011 taxes. It was an accounting error.
Actually the assessed value of the home is exactly the same as it was in 2011 when we purchased it, and the taxes are roughly the same. The escrow/title company put the wrong number in the box that said 2011 taxes. It was an accounting error.
I see. I was confused by the wording in the post where you recounted your investigation. I still think they'll find a way out of their error, though.
I see. I was confused by the wording in the post where you recounted your investigation. I still think they'll find a way out of their error, though.
You may be right! Thanks for your input.
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