Has anyone had a problem with their Mortgage company 'reassessing their escrow schedule' for property taxes?

Question

My mortgage company recently raised my payments by $440 per month to 'make up for' taxes because they have 'reassessed their escrow schedule'.

Basically, they do an escrow analysis each August. This year, they paid my 2nd installment of taxes in August (not September, when due), so that they could include the 2nd installment in the escrow analysis, done in August.

Are they doing this because so many people are defaulting loans now and they are not recovering the taxes they have paid?
What else could be the logic?
I have to think that if this is happening everywhere, the results could be devastating to homeowners.

I tried calling them and they gave me some lame answer about how the county called them and made them pay it in August, but that doesn't make any sense to me.

Thank you.

Yes, I did Homestead the property.

David B. - I get the tax bills and send pass them to the mortgage company, so I know what I owe. I am not saying I don't owe the taxes, but because they changed the escrow schedule, I am basically paying 18 months worth of property taxes within a 12 month period. Wanted to know if anyone was going through this, as well? Default rate in my area is about 15-18% in the past year.

Lender says that if I can 'struggle through' the $440/month increase for the next 12 months, then the taxes will come back down close to what I was paying before. I just think there has to be a better way for them to do this. $440/month is extreme, even if it is temporary.

Grouch, I totally agree with you. Unfortunately, one of the stipulations for me receiving a great interest rate was that I escrow the taxes with the lender. I thought about refinancing, but I got in at the right time and I would still be paying more.

Thanks for all of the great answers. I feel a little better that I am not the only one that this has happened to.

Answer 1

That's standard practice throughout the industry. The tax bill can be paid at any time after the bills are rendered and prior to the due date. Most mortgage companies have hundreds of thousands of tax bills to pay form the escrow accounts so they don't have the luxury of waiting until the last minute to make the payments.

Most tax bills are due upon receipt. Your tax bill was due as soon as the mortgage company received it. They do NOT have to wait until the date that it would be late to pay it.

A $440 increase hurts, but I've seen increases much higher than that.

Answer 2

I wonder how this $440 a month increase compares to your total tax escrow payment. It sounds huge.
If it is a one time payment of $440 and then your payment goes back to what it was before it might make sense. But if your escrow payment went permanently up $440 higher each and every month that sounds like a lot more than just adjusting for making the tax payment a month early!

They are not allowed to use your escrow to cover someone else's taxes so your guess about recovering the taxes on other loans can't be true.

Call the county and ask about your property taxes.

Answer 3

Escrow accounts suck, they are just another way for the bank (mortgage company) to take advantage of your money. The escrow account sets up a monthly savings and management account to pay taxes and insurance, since your taxes and insurance can fluctuate every year so will the escrow account by a preset calculation. Next year your payments may drop or go up again. I got out of my escrow account as soon as I found out what a screw job it was. I figure out what my taxes and insurance will be for the year and set the money aside in a money market account and I COLLECT THE INTEREST until payment is due rather than letting the bank collect it every month and keep the interest.

Answer 4

as taxes and insurance rises so will your escrow account, if you have a negative escrow, meaning if your mortgage company paid it for you you have to make up the shortfall and also pay the the anticipated increase for next year. This is especially surprising to people who buy new homes and only have land taxes the first year. The only reason plain and simple

Answer 5

I have never heard of a payment going up by $440 per month because of escrow. Mine went up slightly because of an increase in house insurance premiums but $440 per month is outrageous. I have heard of payments going up that much because of an adjustable rate mortgage but not because of the escrow. You need to find out exactly how much your taxes costs and your home owner's insurance and divide it by 12 and that should tell you how much the escrow should be each month in addition to your monthly payment. You can request to stop the escrow and just pay the taxes and insurance yourself if there is a problem too.

Answer 6

Escrows are usually required if you have less than 20% equity in your home. If you want to waive escrows and have 20% equity, there is usually a .25 hit to pricing for an escrow waiver.

Answer 7

Did you homestead your property? Alot of times they will add an estimate of taxes based on if your property will be homesteaded. If you have done that, then you are right, it doesn't make any sense. $440 a month is a huge jump. Maybe you should call your tax assesors office and find out what is up - also if you haven't homesteaded you need to do that to drop your taxes tremendously. good luck

Answer 8

They are doing this as a FAVOR to you AND to cover their butts! Your city/county are the culprits, they have jacked-up the property tax rates where you live, and the part of your monthly payment that is saved each month to go towards paying your property taxes is no longer sufficient to cover the bill.

Answer 9

no that answer doesnt make sense. the county doesnt reach out to escrow holders. Do the math yourself...you have your tax figures, does it make sense that that amount needs to be charged to you? If it doesnt, call them and raise heck.

Answer 10

Have you checked to see if your taxes went up? My taxes go up every year and then so does my mortgage payment.