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Escrow Shortage Spread issues.

Posted on: 17th Mar, 2008 01:23 pm
Hi
My mortgage went way up because of my Escrow.
recently my loan was sold to a different bank.
my Mortgage was $917.77 and Escrow $184.89, Total= $1,102.66
I just got a Annual Escrow Account Disclosure Statement saying
that my principal is $917.77 and my Escrow is $247.40 and also
a SHORTAGE SPREAD of $93.77 for the total of 1,258.94
Can I Please get a Explanation on this matter.

Thank You.
Oscar. :(
Your payment amount may have increased due to property tax and/or insurance premium increases. Each year you will be provided with an Annual Escrow Account Disclosure Statement which shows projected escrow activity and can be used to compare your bills from one year to the next. An increase in one or more of your bills will result in an escrow shortage and consequently increase your monthly escrow payment to make up that shortage by the time the bills are owed.
Posted on: 17th Mar, 2008 02:01 pm
Hi Oelvis,

Welcome to the forum.

I have to agree with the above poster that your monthly payments have increased because taxes and the insurance premiums have increased. You can only avoid it if you can make a lump some payment at a time but I think there is no meaning to make a lump some amount and delaying the inevitable.

Best of luck,
Larry
Posted on: 17th Mar, 2008 06:03 pm
oelvis, you can certainly check in with your town's tax department to determine just what has happened with your real estate taxes - the likey culprit here. hazard insurance may change upward at times, but to cause such a shortage as you noted would be quite surprising.

you should be able to get further clarification from the servicing department of your lender as well.
Posted on: 18th Mar, 2008 06:40 am
my taxes and insurance are paid up to date my escrow is short 90.00 monthly because according to my mortgage company I have to maintain one year of taxes and insurance in advance in my escrow account even though the payment there taking out equals the principal,interest, taxes and insurance i refered them to the RESPA act. I thought there allowed a cushion in the amount of 1/6th your yearly payment, which in my case would be 1,800 yearly for taxes,insurance and principal that would equal a cushion of 300.00 there allowed to have over and above the 1,800 for escrow with 250.00 being refunded back to me at years end am I right! please hep.
Posted on: 17th Oct, 2008 02:52 am
I, have rental properties and i allowed my insurance to lapse. The mortgage company saw this and purchased insurance for me at a cost of triple the value of the home they said they could do this per the mortgage agreement is this legal. I have a 60 thousand dollar home and I have insurance worth 180,000.00 on the property, that they have placed on it and now they have rolled that insurance policy of 2,400.00 yearly cost into my monthly payment is this legal.
Posted on: 17th Oct, 2008 02:59 am
Hi darlene montgomery!

The mortgage company can definitely roll the insurance payments into your monthly payments and this is absolutely legal. However, whether they can buy you an insurance which is 3 times of the cost of the house will be better answered by a mortgage attorney. You can take help of an attorney in this case.

Thanks.
Posted on: 20th Oct, 2008 12:20 am
Darlene,

The worst part of this predatory practice is that if you have an insurance claim on your $60.000 property, you would be be paying your deductible based on that price. This is usually 1% of $180.000.
This is an unfair practice, you could be saving a few hundred dollars a year by getting a 3% deductible in your $60.000 property and your coverage and deductible would be exactly the same. The insurance won't pay a penny over replacement value of your property anyways!
These vultures are always looking for creative ways to prey on the consumer.
Posted on: 26th Jul, 2009 09:30 am
I jsut got my escrow statement and they tell me that we are in shortage of about 1200.00. I say bite me! No increases on taxes, no increases on the home insurance. Scam artists and getting away with this shit. Not on this loan you aren't. I can pay my own taxes and keep my own interest thank you.
Posted on: 01st Oct, 2009 03:51 pm
Are you sure that your taxes and home insurance haven't increased? Unless the payments on your taxes and home insurance gets increased, the lender will not be able to increase your escrow payments. Check out with your lender as to why they've increased your payments.
Posted on: 01st Oct, 2009 10:02 pm
Normally, when there is a large increase in escrow payments due to an escrow shortgage, the shortgage was caused by incorrect escrowing at the closing of the loan.

Increases can occur simply because tax and home insurance typically rise each year in costs, but, the largest escrow shortfalls are usually caused by the lender at closing not escrowing properly. Sometimes occurs due to new construction and no one got the taxes right because they were not final at the time of closing. Usually occurs because simply not escrowed properly in the first place.
Posted on: 02nd Oct, 2009 11:26 am
you're correct, of course, john. but of course, taxes do change and insurance premiums also do change, so an escrow shortage isn't quite surprising.

should it be as large as the one that jules sees? i'd have to say no, and that's probably a bank error. but it's not exactly a scam, though. jules, you may as well bite the bullet and pay the new escrow amount and wait for your refund check next year.
Posted on: 02nd Oct, 2009 01:24 pm
The lady we purchased this home from was over 65 and entitled to huge benefit by paying no school taxes (estimated to be 84% of county tax bill).
Our mortagage was calculated based on what she paid. We now owe over 2000 for this past year and have a 400/month increase in our monthly payment. We can reduce our monthly payment some by paying 2000 to the mortgage company now. What is the best thing to do?? Pay now or spread it all out. Neither of us will be 65 for a few more years.
Posted on: 30th Nov, 2009 09:23 am
you know your financial situation as it is now. if you can swing the $2000 now and feel that's better than the higher payment, then you can do that. if the payment is reasonably within your budget, you can do that. frankly, i don't feel i have any business advising you on this, as you would have a much clearer picture of where you are than anyone else does.
Posted on: 30th Nov, 2009 10:18 pm
Hi prichy,

If it's possible for you to pay off the tax difference altogether, then it would be a better idea pay it off now. If you won't be able to afford to pay it off now, then spread it. This will help you clear the dues.

Thanks
Posted on: 30th Nov, 2009 11:03 pm
Your bank will need to tell you exactly but in general your initial escrow account could have been short, your property taxes could have gone up or your homeowner insurance went up.
Posted on: 06th Dec, 2009 05:49 pm
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