mortgage/escrow

[Sasquatch69]

We bought a home last year, and within two months of the sale our mortgage company sold our loan to another large mega-mortgage company. We've had no problems until now; when we received our e-bill this week our payment due was $50 higher than last month's. When I called to ask why, I was informed that they had added a "reserve" to our loan to "account for any increases in taxes or insurance fees within your escrow".

This is preposterous, as I know the insurance cost is staying roughly the same and the taxes in our area are stable; even if they did go up I'd be happy to account for the difference down the road. However, I was told by their CSR that it was non-optional; she did lower the reserve amount from 16% to 8%, but said we can expect this every year. When I mentioned that I thought it was ridiculous that they didn't send out any kind of notice to explain this, her response was, "well, (mortgage comapany) figures that homeowners will call and ask about it anyway". What kind of customer service is that?

Part of the reason we bought a home was to avoid the whims of landlords who raise rent from year to year. Is this normal to expect these kinds of increases, and secondly, if there is extra money left over when the tax/insurance increases fail to materialize, can we take that out if we choose or does it just sit in the escrow account?

 

[SynTex]

if at all possible, I'd try and see if you can get out of the escrow altogether. Every escrow I've had has been a nightmare. They raise it like you described. They are late in paying the tax bill out of the escrow. They send me $5,000 checks because they screw up the accounting, but then accuse me that my escrow has swung too negative.

Getting out of my escrow was the best thing I've ever done.

 

[slevhtown]

That is why I recomend to all my clients not to Escrow, if you are responsible enough to own a home, you should be responsible enough to pay taxes and insurance on your own. This way you also have control of your money, so if you need to dip into the money you yourself put away for taxes and insurance every month you can.

You will get your money back if taxes and insurance don't go up, but as Syntex said it is always a pain in the *** dealing with it.

 

[PacSER]

Usually, you have to own more than 20% of your home, correct? We are just below that but I can not wait to get out of my escrow. Just like the IRS, they are making money off of me. However, if the reserve was NOT in your initial mortgage contract, I do not see how they can change it. I would check your original contract for any language about escrow increases.

They did the same thing to me when we bought our house. They, DHI, sold us to Countrywide and their customer service sucks big time!

 

[Clarence Iba]

We're doing an 80/20 loan on our new home and will not have to do escrow...so I assume it's not required.

 

[Luke Duke]

An escrow shouldn't be required. You may be thinking about morgage insurance.

 

[chitwood]

I originally did an escrow on my mortgage because I didn't want to think about it at the time. Tried to get out of it six month later, but my lender (B of A) said the only way to do that is to refinance as the loan they made is based on having an escrow in place. Not worth getting rid of it at this point, but I'll know in the future.

 

[PacSER]

Most mortgage companies require 20% of the loan before they will kil the escrow.

 

[nysooner]

Actually mortgage companies will waive the escrow requirement if you have less than 20% down if you pay a waiver fee. If you use a good mortgage broker he will pay this fee for you.

 

[celis]

I just signed loan papers today. Did not use escrow put 5% down and did not pay a waiver. I guess my mortgage lady paid it. When she asked if I wanted to use the escrow account I politely said hell no. I've heard too many horror stories.

 

[LCHorn]

When I worked for Countrywide we shifted from adding an escrow waiver fee if a waiver was requested to to making it standard that the fee be included on the GFE. That way, when bargaining over the GFE, the LO's would have the option of deleting the fee if the borrower was willing to escrow. In other words, it meant no more money for the lender, but made it look like we were reducing a fee for many borrowers instead of adding one to the dismay of many others.