Miscalculated T&I

Posted: Wed Dec 03, 2008 10:03 am Post subject: Miscalculated T&I

My husband and I originally got a bare land loan from our lender - this became a construction loan and eventually a home loan. We have T & I taken out each month and just recently found out that our lender has been taking out a grossly undercalculated amount for taxes - as if there were no home on the land. They paid the county taxes, but have now bumped up our mortgage payment by over 900 hundred dollars for the next few months to make up this "deficiency." They say they can only calculate based on the data they have from the county, and of course this land was previously taxed without a residence on it, but clearly the lender should have known for the last year that there was a residence on the property and have been taking out an appropriate amount. Basically, aside from the large lump sum we now owe, we're looking at a large jump in our monthly payment as the original loan officer calculated our payment and escrow as if there was no house! Am I missing something here, or is this very negligent on their part?

gmakerley · Posted: Wed Dec 03, 2008 10:34 am Post subject:

not sure if i would call it negligence, per se; there was certainly a short-sightedness involved here. yes, you would think that the lender ought to recognize that there'd be a shortage in the making.

did you and your husband also not recognize that this was taking place? i'd think that any statements you received from the lender would have noted the amount allocated for taxes. you have the right, as a borrower, to ask a lender to add additional sums to your escrow account.

anyway...negligence or folly or mistake aside, the debt is clear. your taxes must be paid and the lender has stipulated how it needs to be done. no matter how uncomfortable it might be, please strive to make those payments so that you don't risk a default on your loan.

Posted: Wed Dec 03, 2008 11:16 am Post subject:

Thanks for your reply - I appreciate your insight. In hindsight, yes, we can now look at the statements and look at the figure they used to calculate on our closing papers and know that it is way off, but as first time home buyers/builders we feel completely blindsighted by this miscalculation. We pay our mortgage on time every month and knew the T&I was coming out, but did not expect this. This is a fixed 30 yr. and I can't believe our loan officer calculated the monthly payment using such a low tax figure - this is going to add hundreds of dollars to our monthly payment - if it had been calculated correctly from the start, we may have decided to wait to build. The lender has admitted some wrongdoing and has agreed to stretch the 'repayment of deficiency' over a 12 month period (as they are required by RESPA as I understand it), but that in addition to what our payment will now be (and should have been all along) is going to have serious financial implications. We now feel we were misled by the lender from the start. RESPA mentions the lender has the responsibility to calculate T&I using available current data AND calculate a reasonable projection. In our opinion, the lender has done only half of that equation - current data. They looked at previous tax statements on the bare lot, but we feel they did not then make a reasonable projection.

gmakerley · Posted: Wed Dec 03, 2008 11:22 am Post subject:

i'm not disagreeing with your assessment, but i doubt seriously you'll have much success in winning this argument with the lender.

frankly, lots of loan officers aren't as well-schooled in those sorts of calculations as you'd like them to be, or all of us would like them to be. therefore, depending on one to do the calculations correctly is a long shot. that being said, however, you're right in thinking that someone in that lending shop should have had a reality check hit them in the face.

i wish i had better news for you, but as your lender will undoubtedly advise you, the tax responsibility is yours because the property is yours. "reasonable projection" is of course a nebulous phrase - what is reasonable to one may be quite unreasonable to another; so an argument over whether or not they were reasonable in their calculations is likely a losing argument.

jameshogg · Posted: Wed Dec 03, 2008 11:11 pm Post subject:

Hi Guest.

I agree with George. You will have to pay the increased amount if you don't want to default on the loan. And yes, there is a little chance that you will win the argument with the lender. Moreover you have mentioned that the lender has admitted the wrongdoing and agreed to stretch the 'repayment of deficiency' over a 12 month period.That, I guess, will help you a lot.

Thanks

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