My husband and I own a home. Several months ago, we were informed by the bank that there was an issue with the way that our mortgage had been initially calculated and that escrow did not include the property amount of taxes when creating the loan. As a result, our mortgage payment has now increased $400 more than it was initially. How can they do this?
When you elect to have an impound account, escrow typically calculates how much your escrow impound account will cost by dividing the annual property taxes and/or insurance by 12 months. The resulting figure is the dollar amount must be collected each month. This is to ensure that there are sufficient funds to pay your property taxes and/or insurance when they are due.
A deposit of two to six months worth of property tax and/or insurance payments is placed into the account when the escrow impound account is initially set up. However, because property taxes can be adjusted annually and insurance rates also change, sometimes there is not enough of a pad in the account to ensure there is not a shortfall of funds. Unfortunately, this is somewhat of a common occurrence and there is not a huge way around it besides paying your own taxes and insurance without an impound account. By paying them outside of am impound account you are responsible for paying each as they come due and therefore avoid the possibility that enough was not calculated by the mortgage company towards your monthly installment into the impound account. This issue is not related to Riverside County tax laws but rather to the aforementioned issues with impound accounts.
Getting an impound account removed from your mortgage payment can, however, be a little cumbersome with the mortgage company.