Escrow disaster

[sittinpretty]

What is the name of your state? MI

I purchased my home in April 06. My property taxes were NOT included in the mortgage payment. I became unemployed right after moving and was not able to pay the 2006 taxes in full. Although I have made and kept the repayment arrangements with my tax authority, my mortgage company opted to pay the remaining 2006 balance (5k), the 2007 taxes, also 5K (that aren't due until February 2008). This resulted in a 10K shortage. I understand that part of the scenario. What I don't understand is this. They have also added 5K, for ANTICIPATED 2008 TAXES. This pushed the shortage up to 15K. In addition to this, a separate escrow account (5K)for upcoming taxes has been created. I know they can protect their interest, pay the back taxes, and establish the shortage account. But how can they ADD money to the shortage that they haven't paid yet? These payments will cause my mortgage to increase by 1100.00, which is not affordable for me. Thank you all for your comments.

 

[seniorjudge]

...I know they can protect their interest....

You are exactly right and that is what they are doing....

 

[sittinpretty]

Thank you for your response. I do understand the mechanics of them creating the shortage account for the monies they've PAID on my behalf, but can they ADD money that they HAVEN'T paid as well. Thanks, again.

 

[seniorjudge]

Thank you for your response. I do understand the mechanics of them creating the shortage account for the monies they've PAID on my behalf, but can they ADD money that they HAVEN'T paid as well. Thanks, again.

I already answered that:

...I know they can protect their interest....

You are exactly right and that is what they are doing....

 

[sittinpretty]

I get your point, and thank you. Unfortunately, in the course of protecting their interest, they will soon have another defaulted loan on their hands. I simply cannot accomodate the new payment.

 

[seniorjudge]

I get your point, and thank you. Unfortunately, in the course of protecting their interest, they will soon have another defaulted loan on their hands. I simply cannot accomodate the new payment.

Then talk to your lender; lenders dislike foreclosures as much as borrowers.

Try to work something...anything...out.

 

[HUD-1]

Yes, they can collect for future taxes due. Once a year, they will now do an escrow analysis to determine the payment to the escrow in addition to the P&I. This year, your escrow payment will be $1100. If your taxes are 10k per year, $833 is required. An additional $267 is needed to bring you current and create the cushion. Next year, when they do the escrow analysis, this figure should be reduced and be closer to the $833 figure. If you can't afford the extra $267, try asking them to stretch the escrow repayment out over a longer period. In the end, your taxes must be paid.

 

[sittinpretty]

HUD-1 thanks for your response. I understand the escrow process but can they add anticipated taxes to my shortage amount AND set up an escrow account for upcoming tax payments. They paid 10k to the tax authority on my behalf, but have added an additional 5k to this shortage amount, that they have NOT paid. Thanks.

 

[FlyingRon]

I understand the escrow process but can they add anticipated taxes to my shortage amount AND set up an escrow account for upcoming tax payments. They paid 10k to the tax authority on my behalf, but have added an additional 5k to this shortage amount, that they have NOT paid. Thanks.

Read the second half of that first sentence. Not only can they establish the account, they can make you pay into it. That $5K seeds your escrow account.

 

[Some Random Guy]

If you cannot afford the monthly payments toward the taxes you WILL OWE in 2008, how did you expect to pay the taxes in one bug lump sum when they came due?

The bank is only doing what is required to protect their interests. But I seriously doubt you will get them to agree to a payment plan that does not include you paying your taxes in full and on time.

 

[sittinpretty]

SomeRandomGuy- I deposit my tax monies monthly into a high interest savings account, and I make the payments when needed. As it happens, that account was breached during an identity theft incident, and my unemployment situation did not allow me to replenish it before the mortgage company paid the balance for me. I can afford the 5k yearly taxes. I cannot afford the 1,250.50 additional monthly payment. Thanks. Bye.

 

[HomeGuru]

SomeRandomGuy- I deposit my tax monies monthly into a high interest savings account, and I make the payments when needed. As it happens, that account was breached during an identity theft incident, and my unemployment situation did not allow me to replenish it before the mortgage company paid the balance for me. I can afford the 5k yearly taxes. I cannot afford the 1,250.50 additional monthly payment. Thanks. Bye.

**A: did your income change from April 06 till now? Did you get one of those subprime loans, no down, 100% financing or 80/20?

 

[sittinpretty]

HOMEGURU
2/1 ARM. 5% down. Unemployed for 6 months but mortgage company didn't know. No late payments.

 

[FlyingRon]

Just did some calculations on. You're lucky they only want $5K in the escrow impound now. I'd have asked for 7K (divide a years tax into 12 equal installments and you'll see that you're behind now if you expect there to be $10K in that account by the time the next payment is due in Feb).

 

[sittinpretty]

Thanks everyone. I just wanted to know if it was legal for them to add to my 'shortage' at their discretion.