Mortgage Escrow Refund Question

[WillBucko]

Greetings,

My wife and I are a little more than one year into our five-year Chapter 13 bankruptcy. Per our plan, our mortgage payment (including escrow for property tax and insurance) is paid by the trustee.

Last Friday we received a letter from our mortgage-holder saying they had performed an escrow analysis and were 1) reducing our future escrow payment and 2) including a refund check (approx. $490). We are also in the middle of a property tax adjustment effort, and expect our property taxes to be reduced once that analysis is complete. Naturally we will contact our lawyer regarding this notice from the mortgage company, but we've learned (the hard way) to have as many questions and expectations prepared as possible. So here are our questions:

1. Will we have to turn the refund over to the trustee?
2. Since our monthly payment will be reduced, can we amend our plan to lower the monthly plan payment?
3. When the new (lower) property tax amount is calculated, will we be able to reduce our plan payment?

If our lawyer says we are allowed to keep refunds from escrow overpayment, I'm tempted to skip trying to amend our plan, and be "happy" with a yearly escrow refund. However, we could really use the money now, not a year from now.

Any advice/warnings/stories from the forum? We'll post back when I get some lawyer feedback.

Will

[LadyInTheRed]

Your plan payment is equal to your DMI. So, the reduced mortgage payment will not reduce your plan payment, it will increase the amount that goes to unsecured creditors. If you had arrears, non exempt assets or overdue taxes that created a minimum base plan payment and you had to tighten the budget in order to create a feasible plan, it is possible you could amend the plan to reflect your actual expenses. But, it might not be so easy since you've been living with that payment for over a year.

Whether you can keep the refund depends on your plan and your trustee. I wouldn't count on keeping it, but it's possible.

When my mortgage payment went down because the rate adjusted, Bank of America gave notice to the trustee even though the trustee does not pay the mortgage. If your trustee gets notice of the lowered payment, there probably won't be an annual escrow refund. The trustee will probably just pay less to the mortgage. But, they could also just keep paying the amount provided for in the original plan.

[Flamingo]

Greetings,

My wife and I are a little more than one year into our five-year Chapter 13 bankruptcy. Per our plan, our mortgage payment (including escrow for property tax and insurance) is paid by the trustee.

Last Friday we received a letter from our mortgage-holder saying they had performed an escrow analysis and were 1) reducing our future escrow payment and 2) including a refund check (approx. $490). We are also in the middle of a property tax adjustment effort, and expect our property taxes to be reduced once that analysis is complete. Naturally we will contact our lawyer regarding this notice from the mortgage company, but we've learned (the hard way) to have as many questions and expectations prepared as possible. So here are our questions:

1. Will we have to turn the refund over to the trustee?
2. Since our monthly payment will be reduced, can we amend our plan to lower the monthly plan payment?
3. When the new (lower) property tax amount is calculated, will we be able to reduce our plan payment?

If our lawyer says we are allowed to keep refunds from escrow overpayment, I'm tempted to skip trying to amend our plan, and be "happy" with a yearly escrow refund. However, we could really use the money now, not a year from now.

Any advice/warnings/stories from the forum? We'll post back when I get some lawyer feedback.

Will

1. Possibly.
2. If your mortgage payment become less during your plan, it is possible your plan may have to be modified as you will have more disposable income available.
3. See 2. above.

Ensure your attorney receives a copy of the analysis letter you just received, is informed of the refund and also as to any changes as to your taxes. If you don't inform your attorney of these changes, you risk dismissal.