Major Escrow Shortage Affecting Payment

[deleriousone]

We bought our newly constructed home in North Texas 2 years ago. Our original payment was 1280 a month including property insurance, mortgage insurance and city/county taxes. The problem started last year when the homeowners insurance rates went through the roof (literally!). Our policy went from 700 a year to 1200 a year due to the mold scare here in Texas.
At the end of last year we received about 550 dollars in refund from our escrow account. As a result, our payment was changed to 1240 a month. So the payment was reduced. The problem is that this year we have incurred a 2000 dollar escrow shortage. There was exactly enough in escrow to cover the property taxes but none for insurance, etc. Our lender "fronted us" the 2000 dollars to cover the bills, but as a result our new payment, effective 1/04, will be 1480 dollars. It would have gone to 1315 a month due to property tax and appraisal increase. Reasonable increase. The extra 144 dollars a month tagged onto our payment is to pay them back for the "extra" loan. So what is to say we are not going to be in the same situation next year? I knw that there are limits to how much you can have in escrow, but what I am implying is that the lender was grossly negligant in properly estimating what was needed in escrow. Does it sound like I have any case at all, or is there a way other than paying the shortage amount out of pocket to keep our payment down. I don't want to get even more screwed next year when our payment might jump to 2000 bucks a month just to have enough in escrow because we are stuck paying back a huge shortage this year...Any advice? Help! I'm in awe that they could cause us to be this short on our account...

 

[deleriousone]

Followup. We have made our first huge payment of the year. I'm still terrified that this will leave us in bigger trouble next year. Any thoughts, ideas?

 

[Michael Wechsler]

In most instances lenders are usually protected by the written documentation you have signed in addition to this probably being an issue of risks people take regarding purchases. Don't know enough about the case but that seems to be my gut feeling without more.

 

[Rathi]

Although not in that large of a scale.. hehe My mortgage company did the same to me this year... Well... October is the beginning of my year, but...

I have property taxes, and homeowners calculated into my payment as well, and yes, my payment went up this year, about 30 bucks, cuz they said my escrow didn't cover costs...

I'm assuming my homeowners was raised, but I really haven't checked into it that much. In your case, it would be difficult, given how much your payment is, but to try an prevent this in the future, I have been paying an additional 10-20 bucks a payment towards escrow. I know that would not be a good solution probably for you, but I'm praying it will keep me outta a raise next year.....

 

[bra33545]

I feel your pain

We are also in Texas an my mortgage company increased our mortgage 60% to cover a shortage. They said that they were not paying enough taxes for the first two years we were in the house. I am fighting with them to repay it over two years since I feel it was their mistake!

 

[jesace]

Shortage in escrow but did not escrow insurance or taxes

SunTrust Mortgage claimed that I had underfunded my escrow due to lack of insurance and thus attempted to add additional premiums to my mortgage payments for insurance they purchased 'on my behalf'. In turn I provided proof of insurance in December 08 and January 2009 and had my insurance company verify with them on the phone that I have insurance already but they have not yet adjusted my mortgage record. I just received an estimated escrow shortage that said I have not paid the additional escrow which I refuse because I have insurance and pay the property taxes on my own.

I want to know why they are doing this and why my account have not been correctly adjusted after providing proof of my insurance coverage? I will not pay for their mistakes..