to escrow shortage!!! Shouldn't this have been spotted sooner? How can they raise it so much? Any answers out there for me? And no,I can't pay the lump sum[shortgage] to pay it all at once.
2007-07-29 00:35:15 · 6 answers · asked by luckylindy0 4 in Business & Finance ➔ Renting & Real Estate
Actually that is perfectly normal.
Every year, around the anniversary of when you purchased your home, the lender will do an "escrow review" and will determine if for the FORTHCOMING year if your escrow account will be in the negative, and if it will, then they will adjust for it, buffer it a little (by state guidelines) and then send you a bill for the difference.
You have two choices: You can pay the entire thing, or they should have an option of whether you can pay it in payments.
Then the statement should show what your NEW payment will be, to prevent your escrow account from having an escrow shortage for the NEXT year.
An escrow account goes into the negative several times throughout a year, but if it corrects itself into the positive by your anniversary date, then they consider it "even".
That means that you most likely had an increase in either your taxes or insurance.
PS: I have never seen a case where a lender will allow for a buyer to drop their escrow account entirely...this is because most lenders gave you a rate discount for escrowing vs not escrowing.
2007-07-29 01:01:41 · answer #1 · answered by Expert8675309 7 · 0⤊ 0⤋
That's a very common event. If the escrow is short of the amount needed to cover property taxes and insurance (or HoA dues, etc.) then your payment will be adjusted at the annual reconciliation.
Lenders or mortgage servicing companies are only required to reconcile the escrow account once a year. It's up to the homeowner to watch the balance and make earlier adjustments themselves if they want to avoid any surprises and add additional funds to each payment to cover any expected shortfall. If you do that, make sure to enclose a note with each payment telling them what to do with the excess.
BTW, you CAN ask the lender to drop the escrow feature from the loan. I did exactly that myself about 4 years ago. You need to have strong credit -- probably a 720 or higher FICO -- and a good LTV ratio but some lenders will let you do that.
2007-07-29 01:39:12 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
You could try to petition your mortgage company to remove escrow entirely, and let you pay your taxes & insurance yourself. They may do this if you have good credit and a good loan/value ratio, or they may refuse. If they accept, they will pay you, by check, whatever is left in your escrow account and stop charging you for it.
If that doesn't work, there are a few ideas that will help you long-term, but won't cut that payment this year:
1) Talk to your insurance agent, and see if you are paying too much for insurance. Depending on your situation, you may not need medical coverage, water backup, or a host of other riders insurance agents like to pawn on you. Look at each coverage and ask yourself if you really need it, and ask how much each line item costs and if there is a cheaper option.
2) Check your property assessment, which determines your taxes. If it looks out of whack, go challenge it with the local government assessors department.
Escrow is just a formula. They need to take in enough to guarantee that they can pay your taxes & insurance. If your taxes and insurance are higher than they initially estimated, you end up with a shortage. If they go down, you end up with a surplus, which they actually have to cut you a check for.
-->Adam
2007-07-29 00:45:19 · answer #3 · answered by great_and_mighty_adam_levine 4 · 0⤊ 1⤋
I would highly recommend contacting your mortgage company directly. They should be agreeable to working out some sort of payment plan. Mortgage companies tend not to want to take foreclosure actions due to non payment since it costs them money. I've no idea why they didn't spot it sooner, they should be able to give some details about what happened
2007-07-29 00:40:22 · answer #4 · answered by M G 5 · 0⤊ 2⤋
the real estate taxes probably increased - I got hit with the same thing last year on a smaller scale - nothing you can really do about it except pay it
2007-07-29 00:40:24 · answer #5 · answered by Anonymous · 0⤊ 1⤋
a quick web search came up with lots of results but this is the best one i could find for you.
2007-07-29 23:26:17 · answer #6 · answered by Anonymous · 0⤊ 0⤋