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The mortgage company that just acquired my mortgage

Posted on: 12th Jan, 2010 04:45 pm
The mortgage company that just acquired my mortgage sent me a notice saying that they are increasing my monthly escrow payment because they want to have the equivalent of 2 months of escrow payments remaining after taxes and insurance are paid. I want my escrow balance to be near 0 after the taxes and insurance are paid. Can they require me to pay extra to maintain an additional escrow balance?...I have excellent credit, never missed a payment, and since the loan originated I’ve put $2000 extra on the principal each month. The property is my primary residence in California. The loan originated in Feb 2009 and will close no later than March 2039.
a two-month cushion is legitimate, customary and allowed by regulations. they are well within their rights, and it makes a great deal of sense so as to prevent shortages that might occur when taxing authorities increase taxes. you may, of course, ask them to release you from having an escrow account altogether, and that would solve your problem. i don't know how quickly they can deal with such a request.
Posted on: 12th Jan, 2010 08:54 pm
George is correct. Most lenders want that cushion because taxes are adjusted year to year and it's quite possible they may not have enough funds in the escrow account if that was to happen.

Calling the lender may get you released from the escrow, but then you will be required to pay the taxes and insurance annually yourself. This is typically difficult for many people since they have to make a lump sum payment of thousands of dollars instead of a smaller monthly payment.

I would not worry about the escrow balance, it is for your own good to have it there.
Posted on: 13th Jan, 2010 04:38 am
i concur with chris on that last item. having an escrow account isn't really a hardship for a borrower.
Posted on: 13th Jan, 2010 01:55 pm
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