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Escrow Severely Underestimated

  • Thread starter Thread starter jmp73
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J

jmp73

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What is the name of your state? Texas

We have been in our new home for one year, and the mortgage company has just readjusted our escrow payments, as is typical. However, the adjustment has gone from about $500 to over $5000 for county and school taxes. Our only guess is that the original estimate was based on the land with no house on it, which is ridiculous. While we realize we should have noticed this at some point, it never caught our attention until they sent the notice telling us they are raising our monthly payment by just under a thousand dollars a month, both to repay the past shortage and adjust for next year.

I have no problem paying for the correct tax rates, but I feel they should be at fault for the problem over the past year due to gross underestimating, or just flat out screwing this up. Do I have any recourse?

Also, I have actually spoken with them. I told them to go ahead and use the escrow account to repay last year, but not to take out for next years taxes as we will pay those ourselves (my wife and I both do some freelance work, so coming up with the money is not a problem...just not on a month-by-month basis for the higher escrow payment). They told me that they couldn't do that, because to prevent them paying the taxes for next year, they'd have to actually close the escrow account, which they can't do because we have to pay back the shortage. I asked why they couldn't just keep the escrow open to pay for the shortage and flag something so they wouldn't pay the tax when it came due, but they kept telling me that was impossible. Does this sound right to you?

I'm in no way trying to get out of paying what I owe, but the extra thousand dollars a month is going to break me quickly. Thanks for any advice.
 


It sounds like your house was newly built when you bought it. That happens a lot on new construction. It is actually the title company's fault for not showing a more realistic number to the lender for what your taxes would be. How long is the extra $1,000 a month going to last? Shouldn't be more than 6 months. $5,000 a year is steep for taxes in Texas.
 
J

jmp73

Guest
Well, the payback is supposed to be 12 months...though they say they can spread it out over 24, which only makes the increase $600 month...but that's still hard to stomach. I just can't see why I can't continue the payback, but not take out for next year's tax payment. That would only raise my payment by $300-400 and would be much easier to handle.

It was the school taxes that were $3000 +. Hurts a bit.
 

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