[madbayr]

We live in the state of PA. We just refianced with our Mortgage lender we have been with for 10 years, They made a large error on our county tax and increased the projected amount 4.37 times more than it actually is. With this error it nearly doubled our escrow for 2012. I want to close my escrow account due to their negligance and error and my headache and hassle over their error and poor customer service. They informed me they can not close my escrow account because of their disclosure under an FHA Loan there must be an escrow account with this type of loan. Please help, I need legal advice

[LisaB4657]

You won't be able to close your escrow account since the terms of your loan require that there be an escrow account and that the lender makes the tax payments on your behalf. However by law the lender is required to review the escrow account on a yearly basis and any amounts in excess of a specific percentage of the annual taxes must be returned to you. In addition if you believe they are currently holding an excessive amount you can request that an escrow account review be performed immediately.

[ScottGem]

I fought this battle several years ago. When you signed the loan papers part of that was the agreement that the lender would collect an escrow payment as part of your monthly payment and they would pay taxes and insurance out of that payment. Most of the time this account is non-interest bearing. What's worse is that HUD rules allow them to calculate the escrow so that the account balance is never less than 2 months worth of payments. So the amount is generally higher than necessary. And there is absolutely nothing you can do about other than change lenders to one that doesn't require that they manage the escrow. I got lucky, when my lender merged several years back, they allowed me to manage the escrow on my own.

I found that, because of the 2 month requirement, about every third year, your escrow goes down because the balance gets built up.

As Lisa said, ask them to do a recalculation. If they refuse, you can try and calculate what you should be paying and pay that. But if its not enough to qualify as a full payment, then they won't record the payment and you will be considered late. When I got into the battle over this it started when they raised my escrow, much higher than I thought necessary. So I did my own calculation and paid that. What I found out later was the bank's software had a threshold of the amount of the payment against the stated amount. As long as the payment was above this threshold they would apply the payment. If it was below the threshold, then they would hold the payment until they received enough to cover the full payment. I didn't find this out until after more than 2 years of paying what I though I should pay, I dipped below the threshold and got a late charge, even though I had made my payment on time.

[madbayr]

Thank you for your responses. It is much appreciated.