Anybody have mortgage escrow woes?

[jojo54]

Sorry if this runs a little long, but here's the situation. See if this has happened to you:

3 1/2 yrs ago we bought a house in Camden County; dead-end street w/only 3 houses, nice area etc. We weren't first time buyers but we felt we had found our dream home. I think our first mistake was going through our daughter's friend and I can't say anything bad about him 'cause he passed away about a month ago. Anyway, our mortgage wasn't thru a mortgage company, but thru a pool, so to speak (can't remember the name of these companies). Anyway, the mortgage was sold less than a month after we bought the house. The bank that bought the mortgage miscalculated our escrow, BADLY! Within the first two years of the mortgage, our monthly payments went up $325. We figured out that our tax increases could only account for $75, over that 2 years. The bank even admitted they miscalculated. How can they possibly miscalculate that much??? They had the estimated taxes for the coming year when they purchased the mortgage, so why didn't they calculate from that?

Now come to find out that this same thing is happening to a lot of people, some friends and others are friends of friends. This is really just a small fraction in this area, that we know if but, now I'm wondering if this is happening all across the state. So my question is, has this happened to you and do you think this is something I should contact the state about? IMHO this smells fishy. Thanks for the input.

[Tandalayo_Scheisskopf]

1. Yeah, that smells really fishy.

You and the others need to get in touch with the NJ Attorney General's Office and Dept. of Consumer Affairs.

[jojo54]

2. You think so?

I wasn't really sure if anything was wrong, at least at first.

I'm going to email them first and see what happens. This really needs some attention I think.

[MeDeMax]

3. jojo use mortgage tools first...

before taking the matter upto attorney general's office I would first check my numbers.

Write down your principal balance say $ 200,000

the interest rate say 6 %

The property taxes applicable in your public school district.

Go to any mortgage/refinance company's site, there are literally a 1000 of them out there, use their mortgage calculator and find out how much your monthly payment out to be.

Now allow a margin for the bank's miscalculation and see how much you are off by. If it is substantial you can approach your city/county's auditor's office and/or the attorney general's office.

Good luck, hope you get it resolved smoothly.

[jojo54]

4. Thanks, MeDeMax

Will give this a try, but what do you think is a marginal miscalculation? 1%, 5% or more? Just asking your opinion so I have a starting point.

[MeDeMax]

5. it shouldn't be by %

The escrow payments are distinct from your mortgage principal and interest payments. A % figure is not meaningful in the context of the entire mortgage payment.

So if you owed say $2,000/yr in property taxes and insurance (which is where I suspect most escrow money goes) and your mortgage co./bank only collected $1,000/yr from you towards that then they were off 50% in the escrow portion of your monthly payment. They will try to quickly recover what they should have been collecting from you in the first place.

You may also have an option to separate your escrow from your mortgage by paying your taxes & insurance directly by yourself. Then your mortgage would be independant of your escrow obligations, but you will need save some money each month to meet the property tax & insurance bills when they arrive every 6 or 12 months.

[MeDeMax]

6. one other thing about escrow balance

there is a state or federal law that requires avg escrow balance to be in a certain range say between $1,500 & $2,000.

If you the bank messed up and let it drop to $500 or let it go up to $2,500 they face penalties.

They may have accelerated your escrow payments in the near term to bring that balance to the allowed range. If that is the case, your monthly payments should reduce once the balance is in range.

I know I receive an escrow analysis statement every 6 months that explains why my monthly is going up. My increases are typically in the $20 to $50 range per month.