Escrow Account on FHA mortgage

[MrCredit]

Hello,

I have an FHA mortgage serviced thru Wells Fargo. Every time a tax bill is due I have to call them and essentially almost fight for them to send payment out before the penalty date, when I call I get the same generic response, it will be there on time blah blah.

Case in point today is 8/25, I have a $3000 bill due by 8/31 and they still have not mailed payment. Last year they mailed payment on 8/16.

My question is-is there anyway to remove an escrow account requirement on an FHA mortgage, I am so sick of having to babysit WF.

LTV is about 88%. Rate is 2.75%. Thanks.

[StartingOver10]

You have an excellent rate.

I am assuming you got your mortgage before the new FHA mortgage insurance changes in June 2013, right?

If so, then when your LTV drops to 78% you can have the MI removed and most likely remove your escrows.

Your LTV has to be less than 80% to remove escrows and your taxes and insurance have to be paid up in full at the time you request escrows to be removed.

Your lender/servicer may have other requirements. You can check your mortgage to see if there are other requirements like a current appraisal or something else.

Call your servicer to see what additional requirements they may have to drop your escrow. Sometimes there is a fee to do so.

Normally I would say refinance with a conventional loan, but the rate you have is fantastic and not likely to be available anywhere in the market so don't give it up. Even if you have to 'babysit' Wells Fargo every year, it is worth the little bit of hassel for the rate you have on your loan IMO.

[ezdriver]

I'd ask Wells Fargo to confirm in writing that they are responsible for paying the taxes on time when due and that it is responsible for any penalities due to late payment. I beleieve that your escrow agreement requires the above.

[StartingOver10]

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@ezdriver wrote:

I'd ask Wells Fargo to confirm in writing that they are responsible for paying the taxes on time when due and that it is responsible for any penalities due to late payment. I beleieve that your escrow agreement requires the above.

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EZ, shouldn't this be in writing already in the mortgage? (not the note, but the mortgage).

[ShanetheMortgageMan]

Escrow account is for the life of the loan with FHA.

However by having an escrow account, the escrow account holder bears all responsibility for paying your property taxes on time, and if they are paid late, they are the ones who owe the penalty as long as you make your payments on time.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respafaq says:

I got a notice from the county that my lender did not pay my taxes on time and the county is assessing a penalty. Do I have to pay this bill?

Send the bill to the lender. The lender should pay the penalty for failing to pay the taxes on time as long you were current in your mortgage payments. If the lender refuses, you may wish to follow the guidelines for filing a complaint.

[StartingOver10]

Ummm, learn something new every day.  I didn't know that they kept the escrows in place for FHA even if your LTV was less than 80%. Thank you Shane.