The payments I made on a home I owned in the 80’s and 90’s went through escrow. Yeah, they overcharged taxes when they went up. I make the payments on the home I bought in Kentucky directly to the bank. There is no escrow. I pay my own taxes and homeowners insurance.
It keeps it simple.
“In the industry’s slimy underside, firms push borrowers into default and foreclosure, even when they’ve been making payments on time. “
That is just a crock.
I hate say it but there is a pattern that repeats over and over in this story, and in life in general for that matter:
- people don’t look at their bills.
Perhaps my wife and I were raised by paranoids, but there is NOTHING we receive having anything to do with money that we don’t check carefully. I don’t care who it’s from or how trustworthy they are supposed to be. It’s nothing personal, it’s just policy.
I have folks that work for us that set up these direct pay deals, and then months (sometimes years) later find out they’ve been screwed. Perhaps we’re not rich enough to understand or maybe we’re just tightwads - but I work too hard for my money. Not a dam dime goes out without me knowing it’s valid.
Servicers should be eliminated and banks should bear the full responsibility for the mortgage. That said, there is an element of personal responsibility, checking statements, escrows, etc..
What a mess...
What chaps me is they use this escrow money and you don’t get a dime in interest. Billions of dollars. That’s why they pay the taxes and insurance on the last day it’s due. One day amounts to a lot of money in interest gained.
Well, is this problem going to be solved?
This just doesn’t past the smell test. Where are the thousands of people out there screaming that their homes were taken away even though they were making their payments? Now AGs of all 50 states are getting involved right around election time.
Wells Fargo tried the insurance scam on me.
They bought my loan from the first bank. Fine
They sent me a new coupon book. Fine
They sent me a not saying I had not told them who to send insurance escrow to, so they had bought insurance for me, from their preferred company :).
They backed off in a nanosecond, once I called BS. They bought the loan...they should ask the seller who escrow payments go to (they figured out where the taxes went to right?). And if they really couldn’t figure it out, they could ask me...see I don’t know they need to know something until they ask.
Anyway, it got cleared up real quick. But, its a numbers game. If only 1% of borrowers don’t pay attention, they’ve made millions. Borderline criminal.
Since I have a mortgage I also have an escrow account with it.
When the taxes or insurance go up the end/start of the period they send me a note on total new fee’s and I’m given a choice - pay the full increase or my monthly fee will go up so much a month.
Since the fee’s and total amount are on the monthly statement the only “hidden” amount would be the insurance. I’d have to check with the wife to make sure thats the right amount.
Escrow accounts (for taxes and insurance) are one of the most misunderstood aspects of life.
I’m constantly amazed that otherwise bright people can be so stupid when it comes to understanding an escrow account.
Especially if you have an escrow shortage.
Chris Whalen's Terrifying Presentation On The 2011 Foreclosure Crisis
For all you "blame the poor defrauded 'deadbeat home buyer" . . . It is going to get very ugly out there in reality village. Banks, mortgage lenders and Wall Street giants are going to go BK. "Good riddance," I say, and "Put that in your 'Too Big to Fail' Pipes and breathe deeply."
'Nuff said by me here on FR.
A lot of these problems could be avoided by doing business with a credit union.
This reminds me of when I tried to make an online payment of $2500 to my BofA Visa card. I didn’t press the “period” key hard enough and the number I submitted was $250,000. Now, I owed about $5,000 at the time, so here is what happened:
1. They processed my payment as two $99,999 payments and one $60,002 payment, for a total of three payments.
2. BofA paid off the full $5000.
3. The three payments bounced at my bank. For some reason my bank only charged the single $20 nsf fee though.
3. BofA reversed the payments and returned my balance to ~$5000. This was logged as a “cash advance”. The interest rate on remaining balance on a card that is “cash advance” is roughly twice the normal rate (it’s close to 20%).
4. BofA charged a returned check fee of $39 for EACH payment (remember, they broke it into three payments).
5. My wife got a nasty call from BofA saying we were late on our payment, etc.
The total cost to me for not including a decimal place on a payment was roughly $140 plus about $30 of extra interest in just a few days.
And here’s the fallout:
When my wife discussed it with the BofA help desk person, they were belligerent and treated her like we were deadbeats. We have a perfect record with them. We’ve never been late and never gotten close to our credit limit. The representative offered to remove ONE of the $39 charges and that was it. My wife was literally talking to them on one phone and me on another at the time and I responded to that offer as follows: I told her to tell them to leave the card active but we would stop using it. I’ve worked with the payment card industry (PCI) and have worked on PCI projects at two separate companies. I know how banks make money from card use. :)
I then called the help desk number the next day, knowing that they log the conversation for each call. The operator this time was very friendly and reversed all charges, removed the extra interest and moved the remaining balance from the “high interest” category to where it belonged.
This was our main card and the only one we didn’t pay in full every month. We do now. It is also no longer our main card. We only have two, btw, and if Costco took this card we would only have one. :)
I paid the $20 NSF at my bank and did not even bug them about it...
One should never trust banks and always get transaction numbers after you talk with them. It matters.