ESCROW - Does This Make ANY Sense???

[sorcerormickey]

I received a letter in the mail today from the mortgage company. They audit our Escrow Account every February and adjust accordingly.

The first paragraph says they are LOWERING our escrow payment every month by $40. Yay, I'm thinking, right?

The second paragraph goes on to say that they are projecting a $350 shortage on our escrow account for the year 2007. I need to include a check for the shortage with our next payment. I was thinking maybe it was a shortage from LAST year, but it clearly says they are projecting the shortage for 2007.

Now, why on earth would they lower our payment when they are projecting a shortage? Why not just leave it as is to cover the shortage? I can't even call to find out - my name is not on the mortgage so they won't talk to me. BF works until after they are closed the next few days so he can't call either.

I am so confused - thank goodness we are getting a tax refund that will cover this unexpected bill. It's always something, isn't it??

 

[ameraumi]

That is odd. I would call your lender and inquire about it. That $40 reduction a month will cover the projected shortfall.

 

[lbgraves]

Your BF can call & tell them to up the payment amount & have the extra amount go towards the escrow payment. That sounds like a goof on their part.

 

[bellarella]

Do you have a cushion in your account right now? It could be that keeping it at the same amount would exceed the legal limits on how much over your obligation they can have. In other words the amount you are paying will result in a shortage, but that you have a cushion already that that shortage will cover.

I would definitely call the lender though.

 

[sorcerormickey]

Yes, we have a cushion. I think it is just under $700 that we must have in the escrow account at all times.


Like ameraumi said, that extra $40 would more than cover the shortfall - so why bother lowering it?

 

[dcfromva]

I received a letter in the mail today from the mortgage company. They audit our Escrow Account every February and adjust accordingly.

The first paragraph says they are LOWERING our escrow payment every month by $40. Yay, I'm thinking, right?

The second paragraph goes on to say that they are projecting a $350 shortage on our escrow account for the year 2007. I need to include a check for the shortage with our next payment. I was thinking maybe it was a shortage from LAST year, but it clearly says they are projecting the shortage for 2007.

Now, why on earth would they lower our payment when they are projecting a shortage? Why not just leave it as is to cover the shortage? I can't even call to find out - my name is not on the mortgage so they won't talk to me. BF works until after they are closed the next few days so he can't call either.

I am so confused - thank goodness we are getting a tax refund that will cover this unexpected bill. It's always something, isn't it??

sorcerormickey,
Typically, the escrow service offers two options for an escrow shortfall. One would be to pay the entire amount of the shortfall (and reduce your monthly payment) and the other would be to increase your monthly payment to make up the shortfall. Might this be the case in the letter you received?

-DC

 

[sorcerormickey]

Might this be the case in the letter you received?

Ummmm...no. There were no options. The first paragraph said they were reducing the escrow payemnt. The second one explained about the shortfall.

If they would have just left the payment as is, there would be no shortfall.