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Home >> Lending >> Home Mortgage
Am I Responsible for a Closing Escrow Error?
Six months after my loan closed, I received a notice from the servicer that my impound account had a shortage over $700.00 monthly. Investigation by me discovered the taxes/insurance were only impounded to cover the second installment, as the first one was paid during origination. As a result I am now in default, although I have never been late or missed my maximum agreed upon payment. I cannot afford to pay this shortage amount monthly. Is it legal for a lender to impound for six months of the first year on a thirty year fixed loan, and the buyer is responsible for the additional amounts? My property taxes, insurance and home value have declined, but the impound still remains over the maximum for which I qualified. I don't want to lose my home. Is there anything I can do? The servicer acknowledge this error occured at origination, but holds me accountable. Any suggestions.
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 Error or not, as the property owner you are responsible for taxes on the property. The loan servicer is obliged to analyze your escrow or impound at least once every year, to ensure that your monthly impound payments are correct, with the provision that the servicer can require that the impound balance includes a cushion amount of no more than 1/6 of the annual taxes and insurance billings, based on current information.
The servicer may be able to adjust the impound payment down to spread your deficit out more, but there may be limits on how far down the servicer can go. On the other hand, if you have access to other funds, it might be less onerous for you to make up the deficit in a lump sum on a one-time basis.
Published on BankingQuestions.com 10/06/10
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