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help mortgage payment increased


treadnwater
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My DH and I refinanced our home in late December 2006 with Indy Mac Bank.

Couple of months later we received a refund check (I think from Allstate who holds our mortgage insurance) of about $1,200 saying it was payed twice.

So in late June we receive our mortgage statement and our payments have gone up $230 a month because lack of escrow(insurance and taxes).

This is causing a problem with us making our payments on time. Our mortgage payment was high enough because of recent discharge from bk13 and somewhat low credit scores ($1300 a month). We now have a 30 day late on our CR. And thanks to you all the good advice on this site, we have started cleaning up our CR had a few things deleted.

I don't understand how this happened. Can somebody please explain and is there anything we can do.:confused:

Thanks for any advice

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I assume your question is on the mortgage going up, not the 30 day late.

This happened to me a few years back. The mortgage company is required to keep a certain amount in escrow at any given time, this is what pays your taxes and insurance premium. The $1200 you received back, should have probably went back to the mortgage company to go back into escrow.

What you can do is call the mortgage company and advise them you cannot afford the increase can they extend it? When this happened, I did this and they extended the shortage over more months to make the increase less. Mine didn't notice the shortage for 2 years and during a horrible time for Texas Homeowners insurance so my mortgage increased almost $700 a month!!! If you have the money, you can also call and ask to just drop it into the escrow to bring it back up to where it needs to be, then no increase in the mortgage monthly.

Every year your mortgage company will review your loan based on taxed and insurance, if those premiums increase so will your mortgage.

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Lyssarene is absolutely correct. Your escrow account will cause your payment to change about every year. At least mine has for 8 years in a row.

One other thing to check is how much you are paying for homeowners insurance. Allstate is very good at slipping in price increases and not really mentioning the fact except in the small print. We switched insurance companies and reduced our monthly payment by about 190.00 per month.

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......refinanced our home in late December 2006 with Indy Mac Bank. Couple of months later we received a refund check (I think from Allstate who holds our mortgage insurance) of about $1,200 saying it was payed twice. So in late June we receive our mortgage statement and our payments have gone up $230 a month because lack of escrow(insurance and taxes).

..... now have a 30 day late on our CR. And thanks to you all the good advice on this site, we have started cleaning up our CR had a few things deleted.

I don't understand how this happened. Can somebody please explain and is there anything we can do.:confused:

Thanks for any advice

Rick has good advise about checking into different insurance companies. I have a blanket policy with my cars and home now with Travelers. Use to have Allstate - they were raping me. Made the change and saved $2900.

How this happened to you, when your loan was structured by the loan officer who placed your loan with Indymac. An incorrect amount was entered for your monthly escrows.

When you reveived the $1200 refund, this was for the previous escrow account. Depending on when your taxes and insurance are actual paid. There should of been an amount withheld at closing. This will be shown on your settlement statement (HUD).

You should be aware of your escrow amount being withheld in your monthly mortgage payment. Mortgage companys have a strange way of predicting of tax and insurance increases.

As for you 30 day now showing on your credit report, if you do nothing it will drop off in a year. Never the less, you should contact customer service and ask (demand!!!) a letter of explaination saying you were not responsible.

I had a situation with WAMU, where they reported me being late of my mortgage six months. My credit score took a nose drive (like jumping off a high drive into an emtry pool.....lol..).

It took me 9 months till I finally received a letter from them, then two weeks disbuting in with EX, EQ, & TU. My credit was 511, last week checked at 785...:)

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Lyssarene is absolutely correct. Your escrow account will cause your payment to change about every year. At least mine has for 8 years in a row.

One other thing to check is how much you are paying for homeowners insurance. Allstate is very good at slipping in price increases and not really mentioning the fact except in the small print. We switched insurance companies and reduced our monthly payment by about 190.00 per month.

I will suggest that when shopping for insurance, especially for something like a home, cheaper is not always the way to go.

I live in Oklahoma and the tornadoes in 1999 nearly wiped my neighborhood off the map. My homeowners insurance is through Liberty Mutual and the morning after the tornadoe my agent was at my door (okay it was just a door frame) with a check for $20K -- I never even called him. Every additional bill we presented was paid within two weeks, no questions asked, he even drove me to Dallas to pick up a new car because the dealerships locally were tapped out from renting and replacing for everyone.

Some of my neighbors with the cheaper companies (State Farm, Farmer's, & others I'd never heard of) didn't get a dime for six months and then had to fight tooth and nail for every cent spent to repair or replace the houses. One house on my block sat half demolished and vacant for almost two years while they fought with Farmer's.

Sometimes you have to pay a little more for piece of mind, service and honesty.

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Liberty Mutual is whom I went with after I gave Allstate the finger. We had home and auto with Allstate for 17 years and was getting 13 to 23 percent increases every year. Went to Liberty Mutual and saved @2200 on the home and 1500 on auto. While getting better deductables.

LOL the true pisser is we went 15 years and never had a home or auto claim versus Allstate. With Liberty Mutual my daughter totaled 2 cars in the first year. Liberty Mutual is still cheaper than Allstate was.

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Can a bank require you to keep an escrow account? I thought they couldn't force you to. When I got my loan and when I refinanced, they tried to get me to pay into an escrow but I refused and they let it go. Of course, this was when I got my loan, so maybe once the work it in they can require it. If you refi, tell them you refuse to pay into an escrow account. It worked for me. Unless of course you don't mind giving your money to them the whole year interest free.

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I think shopping around might be a good idea, but my DH and I have had Allstate for 20 years now. We have had only one claim with them concerning the house and they paid without any problems. We have 4 cars insured with them along with life insurance. I'm not sure about increases in our mortgage insurance my husband would know better than me. I will check into that as well.

I am going to call Indy Mac today and see if I can't work something out with them to lower the extra $230 maybe spread it out a little more. It would have been nice to know ahead of time that my mortgage was going up due to lack of funds I would have sent them that check for $1200. (Live and learn I guess.)

txtrouble, I'm not sure about that I think it has something to do with the value of your house. (I really need to educate myself on this stuff so I won't get into this kinda of mess again.)

2ndtimearound, we had WAMU for a long time and we had major problems with them reporting lates and adding additional payments to our mortgage while in BK13. (Thats the next thing I will be working on with CRA)

Thanks you all, wish me luck, if not I'll guess I'll be getting a part time job to cover the extra expense. :-(

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Can a bank require you to keep an escrow account? I thought they couldn't force you to. ....Unless of course you don't mind giving your money to them the whole year interest free.
Yes they can and they do by contract. It is annoying. From their perspective, they get to pocket the interest and it is a bit of safety that the bills get paid. But the fact that it is an interest free loan is irritating :twisted:. Throw the borrower a bone here and give 1 or 2% and make us feel better!
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Luna

We had Allstate for over 17 years with no claims for home, auto, and life. They have no loyality to you, once you become one of their customers they start gradually increasing the rates. They are very good at doing it so you really do not notice. I would advice you to shop around, the worse thing that can happen is you find that you are already getting the best price for the best coverage. When we started shopping we checked with 4 other major insurance companies and all were cheaper than allstate with better coverage. Out of loyalty to Allstate I took the quotes to my agent to try to work something out. He told me I was a risk and not only would my rate not stay the same but would increase in the next period. When I asked how I could be a risk when we had never had a claim in 17 years. He replied we were due. LOL

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jq26 - that's terrible they can require it. Absolutely terrible. I agree, the worst part of it is the fact you are loaning them free money. Imagine how much they rake off of all their borrowers! Insane!!! When I got my mortgage via Compass, I requested they not require escrow for insurance/taxes and they agreed. Same with the refi with Chase. They didn't give any problems, so maybe just asking? Maybe depends on lender? A true story that happened to both my dad and brother. The mortgage company didn't pay their property taxes that were withheld via escrow. Funny b/c it happened to both of them in the same year. They got a letter from the assessor and said their taxes weren't paid. After a month of wranglign with the idiots, they did pay up and I guess paid the penalties too b/c my dad and brother didn't pay the penalties. Needless to say, they demanded to stop escrow and succeeded in doing that. Also, I seem to recall a news report here in Texas about a company that didn't pay taxes on thousands of accounts! I wish I could remember the company's name. They claimed it was a mistake but if I remember the contents of the report, there were questions of fraud in it. They claimed a whole filing cabinet disappeared with the escrow accoutns. I guess in 2002 or whatever year it was, computers weren't invented. haha.

Rick - Allstate is terrible. I've never had them but from everyone I know who uses them, they are not happy. They definitely don't think they are in "good hands" with allstate. I also hate their commercial. For some reason it annoys me. I don't like how that dude walks in b/w slow motion cars.

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Before you consider "non-escrow" Think if you can pay the lump sums. I feel better paying a little to escrow each month then trying to come up with a lump sum for taxes/insurance.

I know a few people sweating when taxes are due.

Also mom is with Allstate and does not like them. She has had them over 20yrs I belive and when she shopped around she found lower quote and switched. Well after she signed they quoted wrong of course and raised price. She went right back to allstate.

We go through american family. Our car ins. for 2 cars went from 167$ in 2004 to 100$ now. Until we added 3rd car. (Fiance had lot of tickets at beginning) Homeowners runs 600$ year. We could not combine them yet due to his driving record. We have had no claims yet.

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This link pretty well explains escrow accounts, and how they are required to be handled.

http://www.hud.gov/offices/hsg/sfh/res/respafaq.cfm

Follow mellissadawns advice, because if you are on a tight budget, coming up with yearly insurance or property tax bills can create a burden on your budget. It is much simpler and easier to have an escrow account take care of these obligations to prevent force placed insurance or losing your home in a tax sale.

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Luna

We had Allstate for over 17 years with no claims for home, auto, and life. They have no loyality to you, once you become one of their customers they start gradually increasing the rates. They are very good at doing it so you really do not notice. I would advice you to shop around, the worse thing that can happen is you find that you are already getting the best price for the best coverage. When we started shopping we checked with 4 other major insurance companies and all were cheaper than allstate with better coverage. Out of loyalty to Allstate I took the quotes to my agent to try to work something out. He told me I was a risk and not only would my rate not stay the same but would increase in the next period. When I asked how I could be a risk when we had never had a claim in 17 years. He replied we were due. LOL

They did the exact same thing with my mother! 25 years of policies, one auto claim for $1500 the entire time and they cancelled her, saying she was overdue for a major claim.

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The general rule of thumb is if you get a conventional loan, and your LTV is under 80%, you can pay a waiver fee to pay for the ability to not have your taxes and insurance ecrowed. The fee is .25% of the loan amount.

If over 80% but under 89.99, you will probaby have to have your HO insurance escrowed. If over that you will probably not be able to get away from Taxes and HO insurance escrowed.

The reason for this is that it increases the risk to the lender and as you all know, lenders are very careful these days.

Charles

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Can a bank require you to keep an escrow account? I thought they couldn't force you to. When I got my loan and when I refinanced, they tried to get me to pay into an escrow but I refused and they let it go. Of course, this was when I got my loan, so maybe once the work it in they can require it. If you refi, tell them you refuse to pay into an escrow account. It worked for me. Unless of course you don't mind giving your money to them the whole year interest free.

Any loan that is over an 80% loan to value, usually requires an escrow account with the lender/servicer. This is because there is a higher risk of default - therefore a higher risk loan. (The more money the borrower has into an investment, the least likely they will be to default on it.) This is also why mortgage insurance premiums vary on each program and down payment amount.

The lender wants to cut as much risk as they can so they can sell the loan on the market. Requiring an escrow, shows the investor who will purchase your mortgage, that there is less risk for any loss to the home (earthquake, hurricane, fire) because the HOI will have been paid to cover the loss. This reduces risk of loss on their security interest in your home. This is also true for property taxes. When the servicer pays the property taxes, there isn't any chance of a lien being put on the secured interest for the investor.

However, I did say usually requires. This will not apply for some lending institutions if they keep the loan "in-house" - meaning a portfolio loan. Especially if you already have an account or loan with them.

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Back in the days of sub-prime, having no escrow accounts set up was not a problem. The sub-prime lenders did not want to have to do the extra bookeeping.

Now, with conforming loans and government loans being pretty much all that is available, the rules have changed. You have an option if you are just borrowing 80% or less to not have to set an escrow account up, but it will cost you an escrow waiver fee of .25% of the loan. If you are borrowing >90% you will have to set up an escrow account and for between you may have to set up an escrow account for your home owners insurance.

Charles

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