What recourse do I have if mort. co. opened escrow account without my permission?

[DownNotOut]

I'm in a jam here and I need advice.

Our mortgage payment is/was $1611 a month not including taxes & insurance. I have been trying to modify that since APRIL with IndyMac. Long story short is we had no problem affording our house UNTIL self-employed husband had a 50% decrease in income.

Here's the thing...

We were behind on the property taxes this year. I was planning on paying them before the end of the year, I just needed more time. Well, in July, I get a letter from IndyMac saying that they have paid my taxes and I owe them roughly $3600.

Then they sent me another letter telling me that they have set up an escrow account and are raising my payment in order to make up for the shortage and estimated payments for next year's taxes. They increased my payment by $828 to $2439. This took effect August 1st.

We are three months behind. I have already told them that once I catch up June and July, there is NO WAY we can afford this payment. They just keep telling me that the people reviewing the modification will take that into account.

Is there anything I can do to get them to reverse this escrow account? I don't care if they take the amount they already paid and add it to the back of the loan, but there's no way I can pay them that extra $828 a month. Our original loan was no escrow and I want to keep it that way.

[HHM]

I can gaurantee there is a clause in the note that allows them to do this, so it really should not have come as a surprise. It can be very difficult for you to unwind this, once you default on property taxes, the lender is taking steps to protect its interests. You can usually undo forced placed insurance, but getting them to stop escrowing property taxes after you defaulted, your chances are not good.

[jmc]

I had the exact same situation with Aurora.... I ultimately paid the taxes with a credit card to buy myself some time because like you it would have instantly sank my ship!

In the event of foreclosure - from what I understand - any unpaid property taxes take a priority lien position even over the current 1st mortgage holder... and that is one reason they don't offer any flexibility on the topic

[DownNotOut]

Yeah, I just went back to my original mortgage papers and found what HHM was talking about. That same clause though also says they can cancel the escrow account with a waiver if they want to. They probably won't want to.

I guess my only hope is that they will get moving on my modification. If they could add the escrow shortage to the back of the loan, whatever modified payment they come up with would be more feasible. I'm praying for good news sometime soon! We really, really want to keep our home, so I'm waiting for a modification (5 months so far and still waiting) so I can get current on the mortgage and then file ch. 7. But, if that doesn't work, I guess my last option would be a 13 in order to save the home, although I don't see any of my unsecured creditors getting anything in a repayment plan. My best case scenario - IndyMac modifies the mortgage to a reasonable amount (including t&i) and I file ch. 7 and get our family back on track.

Here's hoping!

[hereforinfo]

Are you trying for a HAMP modification? If so, they are required to escrow your taxes and insurance so don't count on them canceling that if/when the loan is modified. Hopefully they can somehow put this recent tax payment onto your principal balance and start the escrow new for the next bill so that you're not paying past and future at the same time. In the meantime, call and see if they can lower the escrow amount in some way. Lenders usually collect over and above the expected insurance & tax amounts as a reserve, and sometimes you can get them to lessen that reserve amount. It may not help much, but it's something. Also, check to see how much they are estimating for your next tax bill and insurance, when the insurance is due, etc. and you may find they are estimating too high and convince them to collect less. Good luck!

[albacore44]

How many months past the due date on the taxes were you when they imposed the account ?? Not that I'm late, just curious. In Ca. its split into 2 installments one due on December 10 and the second due April 10

[DownNotOut]

How many months past the due date on the taxes were you when they imposed the account ?? Not that I'm late, just curious. In Ca. its split into 2 installments one due on December 10 and the second due April 10

Here in FL, taxes are considered delinquent May 1st, although you have a year to pay the delinquency before a tax sale. They will continue to add penalties. IndyMac paid in June and sent me the letter in July.

[DownNotOut]

Are you trying for a HAMP modification? If so, they are required to escrow your taxes and insurance so don't count on them canceling that if/when the loan is modified. Hopefully they can somehow put this recent tax payment onto your principal balance and start the escrow new for the next bill so that you're not paying past and future at the same time. In the meantime, call and see if they can lower the escrow amount in some way. Lenders usually collect over and above the expected insurance & tax amounts as a reserve, and sometimes you can get them to lessen that reserve amount. It may not help much, but it's something. Also, check to see how much they are estimating for your next tax bill and insurance, when the insurance is due, etc. and you may find they are estimating too high and convince them to collect less. Good luck!

I don't know what a HAMP modification is, but that's the same thing that I was thinking. Just add on the shortage to the principle balance and start regular escrow payments. Thanks!

[albacore44]

Here in FL, taxes are considered delinquent May 1st, although you have a year to pay the delinquency before a tax sale. They will continue to add penalties. IndyMac paid in June and sent me the letter in July.

So were you a year late, or did they pay (June) a month late ??

[DownNotOut]

So were you a year late, or did they pay (June) a month late ??

It was a month late.

[albacore44]

It was a month late.

that sounds awfully quick for them to do that. what if you had paid just a few weeks late ??