Is there any options for escrow shortage?

Question

New home 1st year taxes (mud and property) totaled $4400. Mortgage increased $800.

Answer 1

Your options are usually to pay the shortage in a lump sum (any shortage from previous year plus estimated shortage for the next year) or else spread it out over the year in your mortgage payments. Paying a lump sum only postpones the inevitable, since the following year your mortgage will go up assuming the taxes then are as high, a pretty safe assumption.

If the total taxes for the year were $4400 though, it doesn't make sense that you'd be short enough for your monthly payment to go up $800. Insurance is usually included in the escrow, but that typically doesn't change that much.

Answer 2

You bought the home one year ago, right? Quite frankly, I am surprised that you even qualified for the loan if you can't even afford to buy food for yourself -- but that's neither here nor there, I suppose. The reason why escrow amounts change is due to fluctuations in the tax payment or the insurance rates. Are you absolutely positive that your taxes have not changed? When the escrow amounts were set up at your closing, the closing officer would have used the 2009 tax rates to figure out the monthly amount. The rates could have gone up due to 1) increased tax rates 2) increased home value or 3) you lost your homeowner's exception because you forgot to file. I would double check with the tax assessors office to verify the exact amount of your taxes. I would also verify that there aren't any other liens that were placed on the property -- such as irrigation district liens, mosquito abatement liens, liens from the roofing contractor, etc. I would also check with your insurance company to make sure that your rates were dropped and discuss with your agent other ways that your rates could be dropped. You might think about increasing the deductible, or even shop around for a different company altogether. Aside from that, your only option is to spread those payments over the 12 month period. If you are in over your head and don't want to lost your house, I would start hitting the food banks for groceries, crank down the furnace to 50 degrees this winter, and slash costs even more than you already have. You might even consider taking on a roommate to help with the mortgage, or pick up an extra job such as babysitting, yard work, housekeeping whatever.

Answer 3

I have always just paid them the escrow shortage so my house payment does not go up. However, if they have already increased your payment I think it is too late. If you have the funds available to do this I would contact them to see if they could adjust it if you sent them a check for the shortage. Good Luck!

Answer 4

Pay the total shortage all at once. Your mortgage servicing company will re-calculate your mortgage payments.