@Anonymous wrote:
Let me paraphrase a letter I just recieved.
"Hi, we just noticed that for the last two years we haven't been able to do basic arithmetic very well. During that time we've spent down all of the escrow funds that are supposed to cover increases in your taxes and insurance costs. Somehow we didn't notice this happening until it was all gone.
Therefore, for the next year all of your mortgage payments are suddenly going to be 66% higher. Yes, you did read that right, 66%. Surprise!
Love,
Chase"
....and of course this letter comes on the DAY we're just recieved a loan to cover thousands of dollars on necessary repairs to the house.
Is there some sort of legal protection against one's mortgage company being inept?
You will need to look at the mortgage agreement that you signed to see how shortfalls in escrow are handled.
In the end, unfortunately, I would believe that the borrower has some responsibility for knowing the annual insurance and property taxes. Chase spent your escrow money to pay the necessary expenses to protect their interest in the property. The underlying causes of the emptying of the escrow account are the taxes and insurance. Even if there weren't an escrow account for these things, you'd still be responsible for payment of the higher costs.
Still, it stinks. If the escrow payments you'd been making for the past two years had been increased from the very moment that your insurance and taxes went up, then the effect would be less dramatic. But you would have been paying a higher amount for that entire time.
I'm pretty stunned at the magnitude of the increase in monthly payment. Why did that occur? Was the original monthly payment calculated using the former owner's tax bill, which would have changed when it was reappraised at the time of purchase? Did you make major renovations after you purchased that led to a reappraisal? Was there a claim on your property insurance that led to an increase in premium?
Starting Score: 627 EQ, 621 TU - 11/15/08