Escrow shortage

[Billiegirl]

Jurisdiction

Tennessee

I have never heard of this before or this happening to anyone else. Our bank hit us with over a $2,000 escrow shortage which is changing our payment $200 up. Is this legal. To begin with they took the money for the shortage out of my checking account at another bank without my knowledge. My payments have been $525 like most people in Tennessee we have low house payments this raises up to almost $800 a month. Which is impossible for us to meet. Is there anything we can do about this would it be worth our while to hire real estate lawyer I don't know what to do I've met this is never happened to me before it's always been $10 $20 but never over $2,000 shortage!
Thank you so very much
Billie
Your website says that information is free I'm hoping it is if it's not free then don't give me any information because I don't have any money.

 

[hrforme]

Is this your first year owning the home? This is very common in states where you escrow certain home expenses rather than paying them directly. The bank (aka the mortgage holder) wants to make sure that you keep up with taxes and insurance on the property because they own such a large stake in it. There are very few mortgages that allow for a borrower to NOT escrow and usually you have to have very very good credit and a long term relationship with the lender to do so.

Escrow is just a savings account to pay specific bills related to your mortgage. Each payment you make is part principal, part interest and part escrow. Your bank/mortgage holder should have provided you with an annual report explaining the shortage or excess. Some part of your mortgage billing went up (property taxes or insurance usually are the two main ones that escrow and charge back to your mortgage) other than principal. If you have a variable interest rate, it is possible that could have gone up too and increased the payment amount. You should try to figure out which one increased and then you might have to go to them (the county or your insurance provider or lender) and ask them. Again though, you should have gotten notices in the mail from the state/county or your insurance provider.

They definitely have the right to increase your escrow/savings based on projected costs over the next year. And I suspect you signed something that allowed them to take the shortage out of your checking account at another bank, because how else would they have access to that information?

 

[mightymoose]

And just to add, for the same reasons given above it is possible to have an escrow refund too.
I once had an escrow refund that covered my mortgage payment for that month. It was a pleasant surprise.
My payment has been modified once or twice since due to property taxes but only by a tiny amount. It's normal.
Yours will not likely have a major change again unless you have a variable interest rate that changes drastically.
As for pulling the money from another bank account, you'll have to review all your documentation, but since they already did it I think you have your answer.

 

[adjusterjack]

I have never heard of this before or this happening to anyone else. Our bank hit us with over a $2,000 escrow shortage which is changing our payment $200 up. Is this legal.

Yes.

To begin with they took the money for the shortage out of my checking account at another bank without my knowledge.

Sorry, but you did have knowledge. The bank's right of Set Off is addressed in both your loan agreement and in your account holder agreement. I'm guessing that you never read either of them. You consented to that when you made those agreements.

Is there anything we can do about this

No.

would it be worth our while to hire real estate lawyer

Probably not. Besides, if you can't afford the $200 increase in payments you certainly don't have money for a lawyer at an average rate of $300 per hour.

Yes, information here is free.

I've deleted your email address from your post. It's not wise to put that out on the internet. Makes you vulnerable to scammers.

 

[txls]

It does seem like an unusually high amount. Did something happen to increase your insurance or property taxes that much?