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Is it legal for a mtg co to use escrow acct for pay off

Posted on: 04th Jan, 2007 06:05 am
We owned a mobile home that was sold Oct. 20. The mortgage company used the escrow account that was collected for the taxes to pay off the rest of the loan without telling us. Now we owe taxes for the whole year. Since this was a mobile home and the sale did not go through a title company, how can we get the property out of our name?
Can lender use the funds from escrow account for the loan pay off? I am not aware of it, but as far as I know escrow account can not be used for such purpose.
Posted on: 04th Jan, 2007 10:40 am
Hi,

You can make out a fresh warranty deed to transfer title ownership for the mobile home in the name of the new buyer.
Posted on: 04th Jan, 2007 12:11 pm
The escrow account is supposed to be used for paying the taxes and other cost. There are tax dues pending for the year but should have been paid out of the account. The lender will be required to pay penalty for failing to pay the taxes if you were current with your payments.

Under Section 6 of RESPA, the lender is supposed to make the payments out of the escrow account in time, and your case is a clear failure on lender's part. Under this section you can bring a law suit.

You should also file a complaint with CPO (Consumer Protection Office) of Attorney General's Office in your state or with HUD.
Posted on: 04th Jan, 2007 03:47 pm
No Glen, it's not wrong actually. I mean the owner may not gain anything out of the legal action.

Lenders actually have the right to use the money held in escrow account (mainly for tax payments and insurance premiums) towards getting back the remaining money. But yes, they should have informed you, so that you could have arranged for the tax payments.
Posted on: 04th Jan, 2007 10:51 pm
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