Mortgage Increase Advice!

cbaur88

LoanSafe Member
Feb 27, 2017
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Hi folks, my wife and I are almost at wits end and looking for some advice and assistance. My apologies in advance if this is in the wrong thread and if a bit lengthy, but were pretty desperate.

We bought a new home just about a year ago (March 18th 2016) we had our monthly mortgage payment and have been paying since April of 2016. Initially the mortgage payments went to the mortgage company which in turn sold the loan to US Bank Mortgage few months after settlement. Last month we got our monthly mortgage statement from US Mortgage which indicated our mortgage had gone up $100 because of escrow shortages for the prior year. It was short almost $600.

My wife and I were shocked to say the least! How could this happen, why did this happen? After weeks & months and a ton of back and forth with the Mortgage Companies and the Title Company, US Mortgage per my request send a written explanation as to why the mortgage went up.

They indicated that the taxes were more then the initial escrow account disclosure statement indicated. My property has two lots, the main lot my home sits on and a small extended lot behind my home. According to US Mortgage my taxes were $45-$50 per quarter more then the initial escrow statement. Also they mentioned the taxes for the 2nd lot behind my home were not projected?

Does this mean the initial escrow account disclosure statement didn't include that 2nd lot and take that into account when calculating my mortgage payment? 2nd lot is included on the deed. I reached out to my initial mortgage company, which in turn pointed me to the title company and said it's their job to handle this.

I called them and filed a complaint and turned all US Bank documentation explaining this to them, however they denied our claim stating that the taxes were accessed correctly at the time of settlement? How can this be? How can my mortgage go up like this after 1yr? The monthly mortgage payment is arguably the single most important aspect of buying a home.

We did call our local Twp and they stated the elderly women who used to live here qualified for a NJ Homestead rebate and also a widow rebate which explains some of the mis-cue however why wasn't this identified at settlement?

Shouldn't they have caught this? And it still does not explain why the 2nd lot was not included and US Mortgage has no record of having to pay for the 2nd lot. In their words "It was not projected". I cannot thank you all in advance for your help and time, we are just trying to get to the bottom of this and understand why this happened.

Thank you again!
 
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Moe Bedard

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Hello,

It sounds like your original lender did not set up the escrows correctly in the beginning and it was not caught until the loan was transferred to US Bank. Your old lender is just passing the buck and could care less now that they do not service the loan.

Unfortunately, they have the right to do this and there is not much you can do.
 

cbaur88

LoanSafe Member
Feb 27, 2017
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Thanks Maurice! I've asked them for documentation proving that they did include that 2nd lot of which they have sent to me which indicates the lot was included? US Mortgage admits they did not included the 2nd lot when they took over the loan but I am still unclear why it went up. If they included the 2nd lot initially wouldn't they have at that point saw or caught that my escrow would be short and raise my mortgage at that point vs. this past month when it's out of loan service? I just don't understand, how it is legal for a mortgage payment to rise like that after a single year.
 

despritfreya

LoanSafe Member
Sep 8, 2011
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Not sure what the issue is. Either you pay your taxes and insurance directly or they are paid through the mortgage. It is what it is. If a mistake was made you still have to pay the taxes and insurance. Easy solution. . . don't impound.

Long ago my lender made an impounding mistake. One mistake in my book means I take over. I immediately took my lender out of the picture and began paying my taxes and insurance directly. That was 14 years ago. Why not ask if you can get rid of the escrow? You may have to pay a one time fee (as I did) but, if there is no escrow you have complete control. Just make sure you are responsible enough to bank sufficient funds to cover the costs when they come due.

Des.
 
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cbaur88

LoanSafe Member
Feb 27, 2017
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Not sure what the issue is.
The issue is my mortgage went up $100, that's the issue, not sure you read it all the way through. My issue is regarding if I pay them directly or via Mortgage Co. I cannot get rid of the escrow, it's considered a PMI even though I paid it all up front, I tried unfortunately.
 

despritfreya

LoanSafe Member
Sep 8, 2011
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I understand what your concern is. My comment was more to the tune of. . . if there was a mistake, ok. I must assume that, had there not been a mistake, your monthly payment would have started at $100 higher since that was what was needed to match the cost of taxes (and insurance).

Sorry that you must continue to impound. Can tell you that it has been a pleasure over the years not having to rely upon some 3rd party (the mortgage company) to pay my bills. After all, I am a control freak.

Des.
 
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cbaur88

LoanSafe Member
Feb 27, 2017
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I agree, the 1st thing I thought of was getting rid of the escrow. We are pretty responsible and I'd love to pay my owe taxes and home insurance but they shot me down. Only way to get rid of the PMI attached to the loan is to re-finance.

That is exactly my argument!! If there wasn't a mistake my payment would be $100 more? I simply don't get it, everyone is passing the buck, nobody is admitting fault, how the hell does your mortgage go up 100$ after 1yr. Where do I go next? I've never seen such a more flawed system in my life. From people bidding on a home to only later find out they don't qualify, to making a mistake on a mortgage payment and it legally being allowed, hilarious! Wonder why people say buying a home is the most awful experience!
 
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driftwood

LoanSafe Member
Sep 17, 2012
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From what I can tell your "mortgage payment" is not the part that went. Mortgage principal and interest hasn't changed... they recalculated the escrow payment based on actual property tax payments. This happens every year when they do the analysis on escrow accounts and your payment can go up or down depending on actual payments. Sounds like in your case they missed the estimate of property tax by alot but it happens... a lot more in the first year of buying a home. In fact it happens so much most closing docs in California where I live and have purchased several properties that the closing agent usually explains during signing that payments are based on estimated taxes which is subject to change and can impact escrow payments that are part of the monthly payment to the bank.

I agree with Des I do my best to avoid escrow accounts for this very reason, plus not to mention that they make you pay the estimated annual costs PLUS 10% cushion so technically you are paying more than you need to. Yes they pay some interest on the balance but the rate is so minimal that it's not worth paying the additional amount in my opinion.
 

Moe Bedard

Call 1-800-779-4547
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Aug 10, 2007
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Southern California
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Thanks Maurice! I've asked them for documentation proving that they did include that 2nd lot of which they have sent to me which indicates the lot was included? US Mortgage admits they did not included the 2nd lot when they took over the loan but I am still unclear why it went up. If they included the 2nd lot initially wouldn't they have at that point saw or caught that my escrow would be short and raise my mortgage at that point vs. this past month when it's out of loan service? I just don't understand, how it is legal for a mortgage payment to rise like that after a single year.
Unfortunately, mortgage servicers make mistakes and under the Real Estate and Settlement Procedures Act (RESPA) , they can either ignore the mistake, correct the mistake and make you pay the shortage within 30 days or over 12 months.

This what the Consumer Financial Protection Bureau (CFPB) says on escrow shortages:

  1. SHORTAGES.

    1. If an escrow account analysis discloses a shortage of less than one month's escrow accountpayment, then the servicer has three possible courses of action:
      1. The servicer may allow a shortage to exist and do nothing to change it;

      2. The servicer may require the borrower to repay the shortage amount within 30 days; or

      3. The servicer may require the borrower to repay the shortage amount in equal monthly payments over at least a 12-month period.
    2. If an escrow account analysis discloses a shortage that is greater than or equal to one month's escrow account payment, then the servicer has two possible courses of action:

      1. The servicer may allow a shortage to exist and do nothing to change it; or
      2. The servicer may require the borrower to repay the shortage in equal monthly payments over at least a 12-month period.
LINK: https://www.consumerfinance.gov/eregulations/1024-17/2015-18239#1024-17-f
 
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cbaur88

LoanSafe Member
Feb 27, 2017
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Thanks everyone for your help and more of an explanation, it is greatly appreciated! I am illiterate to this stuff so when trying to understand it all it frustrates me. I didn't and don't mean to offend anyone in this business. I work in IT and I have plenty of criticisms with computer systems not working. But it again re-affirms my suspicion that this whole industry is very flawed. Again to me the single most important aspect of buying a home is what you can afford in that dreaded monthly mortgage payment. To get that wrong by that much is very disturbing. I would think there would be several several checks and balances to avoid this. What if that increase was $200 or $300 and I or someone simply couldn't afford that increase? What then? I foreclose on my home because someone made a mistake. Forgive but it's pathetic and I feel everyone is out to make a buck and turn a cheek. Again thank you and my apologies for venting!
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,850
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Southern California
www.loansafe.org
You are welcome and please understand that how you feel is 100% warranted.

We are not frustrated in the least with your questions. In fact, I agree with your frustrations and why you are upset. This is why the LoanSafe forum exists is to help people like you who have been screwed and or have mortgage questions.

We ALL know that the banking and mortgage industry is flawed as is most of the world. The problem many borrowers face when a mistake is made is that there is little to no recourse under the law and many laws actually protect the creditor/lender then they do the consumer.

The amount could have been $1,000 and yes, they would make your payment go up regardless if it resulted in foreclosure because that is they way the mortgage and debt industry operates. It puts profits before people and will take a loss to prove a point.

I wish you the best and hope you can find a resolution soon.
 
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