Question for Mortgage Lenders???

[ziemer]

I recently requested that my escrow account that is tied to my home mortgage be eliminated and for me to pay taxes and insurance directly. The lender accepted my request and asked for a $700 modification fee. Does that seem a little steep???

[Von Bongo]

Normally if you ask to not escrow up front the standard charge is .25% of you balance to waive the escrow requirement. How does that compare the fee they are requesting?

And before anyone says, I never paid that fee, you have to ask yourself, did I tell the lender that I didn't want an escrow up front? If so it was likely built into the pricing of your loan rate up front.

And mark, they can't escrow a years worth of both up front. An analysis is done on the estimated payouts of taxes, insurance and anything else being escrowed. Each month the lender can collect 1/12th of that total. Lenders are allowed to then hold a 2 month reserve over an above the point that you would zero out the account each year. This is a federal statute so if you leder had you put a year of both in up front they viloated RESPA. They also have to do an analysis each year on your account and if you look at it you will see that each year there is a month were it will be at that 2 month reserve requirement. If they are off on their estimate by more than a +$50 they have to refund that money to you on an annual basis.

Of course if they are short they will revise your monthly payment to make up the shortage and get the account on track.

[Von Bongo]

One time charge...or once per loan, if you refi they will try and charge it again.

There will be a few instances where it's waived but it's pretty industry standard. At least it was, with the refi boom over lenders may be hungrier and eating the cost.

[ziemer]

Originally Posted by Von Bongo

Normally if you ask to not escrow up front the standard charge is .25% of you balance to waive the escrow requirement. How does that compare the fee they are requesting?

That's exactly what is was. (Actually, it was .25% of the original loan amount) We've had the loan since March of 05 and it was recently bought by the company who has it now. I've been going back and forth with them since the beginning of January to have escrow eliminated and they've given me the run-around until I finally got the paper-work yesterday and saw this "modification fee".

I let them know my disapointment, and even talked about re-financing. The "supervisor" noted my frustration is going to take it up with the next up "supervisor" and let me know. We'll see what happens.

[Von Bongo]

Good luck! My guess they will relent to some extent. Depends on the company

[TexomaPowerboater]

Can't you just stop paying the escrow portion or your mortgage? I mean you don't owe them anything right

After all the closing docs I see run across my desk I have long suspected shady practices of underwriters. I once saw a person buy 12 homes and refinance the same homes in the same year within 2-3 months of purchase - I caught the underwriters charging him homeowners insurance twice and sometimes three times a year for only a one year policy. WTF?

[Von Bongo]

Originally Posted by TexomaPowerboater

Can't you just stop paying the escrow portion or your mortgage? I mean you don't owe them anything right

?

Sure you can stop. And then the lender can forclose on your property because you defaulted. The mortgage or deed of trust you sign specifically talks about escrow accounts and the requirements.

If you don't want to pay them get the lender to agree to it up front. That's the easiest way. They will however reserve the right to require it down the road if you fail to pay your taxes or insurance.