FHA Streamline and Property Taxes/Escrow in TX

growing123 · ‎08-04-2016

I'm hoping someone can help. I'm in the process of doing a FHA Streamline refi with my current lender, US Bank, and on the latest Loan Estimate they have 13 months of property taxes and 15 months of homeowner's insurance! (I understand 2 or 3 months, but 13?) Of course I asked why so much since I my current escrow account will cover taxes and insurance for next year. They said that because my taxes are due in October they need to collect that much per Texas guidelines.

My taxes are not due in October, the statements are mailed at that time but they're not due until January and US Bank usually pays in mid-December. I called and spoke to my loan officer and he said they could apply my current escrow balance to the new one so I wouldn't have to pay that at closing, just send a letter.

Great, I sent the email but got a response that 'The escrow credit is being applied toward the set up of the new escrow account. That is why the credit is being given to you on the payoff which in return brings the funds due at closing down but we still have to collect 13 months per state guidelines.'

So what does this mean and why would I get a credit on the payoff and not a refund check of the current escrow balance?

DallasLoanGuy · ‎08-04-2016

@growing123 wrote:
I'm hoping someone can help. I'm in the process of doing a FHA Streamline refi with my current lender, US Bank, and on the latest Loan Estimate they have 13 months of property taxes and 15 months of homeowner's insurance! (I understand 2 or 3 months, but 13?) they are building a new escrow account. they collect taxes to cover the taxes that are due at the end of the year and add a couple months for reserves. your old escrow account gets refunded to you later. to avoid rolling in all of that into the loan. you can come to closing with some cash knowing that you will get it back from the old escrow account in about a month after you close. Of course I asked why so much since I my current escrow account will cover taxes and insurance for next year. They said that because my taxes are due in October they need to collect that much per Texas guidelines.

My taxes are not due in October, they are indeed due in october. and considered late on feb 1st the statements are mailed at that time but they're not due until January and US Bank usually pays in mid-December. they all pay around that time I called and spoke to my loan officer and he said they could apply my current escrow balance to the new one so I wouldn't have to pay that at closing, just send a letter. <= this would be great.

Great, I sent the email but got a response that 'The escrow credit is being applied toward the set up of the new escrow account. That is why the credit is being given to you on the payoff which in return brings the funds due at closing down but we still have to collect 13 months per state guidelines.' that sounded weird

So what does this mean and why would I get a credit on the payoff and not a refund check of the current escrow balance? not sure. i have heard of lenders rolling over the escrow account to the new one. i have never done that because i never refi people that we currently service..... because we sell our loans. not sure of the rules here. if it were me, i would pay the escrows and pay myself back with the escrow refund

ref: http://comptroller.texas.gov/propertytax/local-protest/remedies/paying-your-taxes.html

Retired Lender

growing123 · ‎08-04-2016

Thanks for the reply dallasloanguy. Maybe I'm doing my refi at the wrong time of year then.

I agree, I would opt for pay the escrow at closing and get a refund check afterwards.