Posted by MikeC/NY on 9/20/07 4:56pm
Msg #212305

And the hits just keep on coming...

More fallout from the American Home Mortgage bankruptcy - checks sent by them to pay real estate taxes for some homeowners are bouncing.

Here's a link to the story: http://tinyurl.com/23c274

Reply by Todd/OH on 9/20/07 6:27pm
Msg #212324

Ouch !!! That ends up being the taxpayer's problem. Tax foreclosures are becoming more common in my area. It's scary.

Reply by JohnnyB on 9/20/07 6:52pm
Msg #212329

Thats a good reason not to escrow for taxes and insurance. No way, jose would I do that anymore.

Reply by Sylvia_FL on 9/20/07 7:29pm
Msg #212337

I have my own "Escrow" account. I put X amount of dollars into it each month and only take out when taxes and insurance are due once a year. Better me having the interest than a mortgage company.

Reply by Susan Fischer on 9/20/07 8:24pm
Msg #212348

On the other hand, when my husband died, and the

household income was cut by a more than half in the blink of an eye, I would have lost my house had I not had a escrow acc't. Taxes and my HO insurance were both due in December...no way to save for that then.

Also, some lenders require excrow acc'ts for some borrowers, particularly when the county taxes are in arrears and are part of the payoffs.

To each his own. The bad people are crooks, and the oversight has been negligent, so they continue to prey.

Reply by Linda_H/FL on 9/20/07 8:27pm
Msg #212349

Re: On the other hand, when my husband died, and the

With interest rates on savings accounts what they are today I don't feel I'm losing a whole bunch by having my mortgage company escrow for taxes and HO - least I don't get hit with those big bills every year - worth the few dollars to me for the peace of mind knowing those two huge bills are taken care of. JMHO

Reply by Sylvia_FL on 9/20/07 8:50pm
Msg #212352

Re: On the other hand, when my husband died, and the

I know the interest isn't great. My savings account just went from 4.50 to 4.30. But I feel it is better in my pocket than anyone elses. And with having the money in the savings, the tax and insurance bills each year don't bother me. It is in a separate savings account than my regular savings, and I never touch that money except for taxes and insurance.

Reply by Becca_FL on 9/20/07 9:04pm
Msg #212354

For once, I am agreeing with JBG...mark this date.

After the storms of 2004, I saw time and time again that brws with escrowed insurance were not getting their insurance premiums paid and then getting forced place insurance. The main culprit was Ameriquest, but the CWs and the NC clients were having issues too.

I met one woman that had an Ameriquest loan with escrowed insurance. Her insurance was due in August, Ameriquest did not pay her premium in August, when it was due. When Frances hit labor day weekend, this woman was uninsured and she did not even know. Three weeks later, when Jeanne hit, she was still not insured, even after making escrow payments every month on a timely basis.

I did a refi for the gal and her insurance premium was over $4k per year for a $195k property. She ended up paying for all repairs on her own and I don't know what the end result was with AQ.

I had heard so many horror stories about service transfers and escrow/taxes not being paid that I made the decision not to let any entity be responsible for my taxes and insurance.

I know y'all have heard similar stories.

Reply by janCA on 9/20/07 10:04pm
Msg #212358

Re: For once, I am agreeing with JBG...mark this date.

Wow, Becca, this is opening my eyes. Our loan on some investment property just got sold to CW and I just don't trust them with what is happening in this market. I think we need to rethink having an escrow account set up with them.

Reply by Susan Fischer on 9/21/07 2:24am
Msg #212369

Yes, there are horror stories. I had one too...Trans

somethingorother out of Houston, TX. They didn't pay my HO. I didn't find out until a little tornado blew through and toppled my chimney, sending it crashing through my roof in the middle of the night.

For 6 months I had no coverage - and nobody said a word.

Trans Something said, "Too bad," and Chubb (the insurance co) said, "Nope, no pay, cancelled; we're not on it, and not only that, we're not going to reinstate or write a new policy..." BUT, the Insurance Commissioner of Idaho took 15 minutes out of his busy day to call me back letting me know that not only were they "on" it, they werre reinstating me back to December, paying my claim, and waiving the deductible for this loss." Whole thing took half an hour. Thank you very much.

Of course, that was back in the day when states had power. Trans Something lost their license to do business in Idaho, and even though Chubb no longer wrote business in Idaho, they had to make good the customers they had written.

Point being, that there are remedies.

And, while I agree that saving one's cash and paying one's own bills is a very sensible way to go, the realities are that the ~vast~ majority of folks who rely on escrow accounts have two fewer bills to worry about, and don't have horror stories to tell.

If there are no longer remedies, then we have allowed these corporations to operate outside the law - there are strict fiduciary duties associated with these financial obligations - and the voters who elect congresses that cave to the corporate lobbyists for deregulation and less and less accountability are to blame.

Reply by TRG_wy on 9/21/07 8:43am
Msg #212387

The key here is to look at your monthly mortgage statement and verify that the taxes and insurance are paid when due (when escrowed of course).

Reading the posts above, all situations could have been avoided if the BO read their statements and kept on top of things.

Reply by WDMD on 9/21/07 8:53am
Msg #212391

When my mortgage was sold no one notified my insurance company. When the bill became due the insurance company sent the bill to my old servicer who promptly ignored it as they no longer serviced my mortgage. The new servicer of course never received the bill. I got a letter from my insurance company notifying me that the policy would be cancelled in a week. One phone call and the situation was rectified. Do other's insurance companies not notify them if the policy is about to be cancelled?

Reply by TRG_wy on 9/21/07 9:08am
Msg #212396

>>
One phone call and the situation was rectified. Do other's insurance companies not notify them if the policy is about to be cancelled?

Most states have a mininum 30-45 notice requirement before insurance can be canceled for nonpayment. If nonpayment is due to the monies not being paid from an escrow account where the borrower entrusted and had reason to believe it was paid, the state insurance board can be of great assistance.

Reply by Dennis D Broadbooks on 9/21/07 11:17am
Msg #212424

While Insurance Companies...

...are not necessarily required by law to provide a grace period for premium payment, most do. When a mortgagee/lender is making the payments from escrow to the insurance company, the insurance company generally allows more time (30 days is probably the norm) for the premium to be received before the actual cancellation takes place. In any event the insurance company usually sends out a minimum of 3 notices to all interests (insured & mortgagees) for a policy renewal; 1st is the renewal notice itself (normally sent at least 30 days prior to the renewal date), 2nd is a late notice specifying the date the policy will expire if premium is not received (referred to as the "grace period" & the notice is usually generated the day after the renewal date if premium hasn't been receipted), & 3rd is the cancellation notice. All interests in the policy, including the insured (or borrower in this case), should receive these 3 notices over an approximate 60 day period of time.

As usual my opinion should not be taken as legal or insurance advice. It's based on my 30+ years in the P&C insurance business here in MO & my knowledge of MO insurance law as a currently licensed producer. Consult your own insurance agent in your individual state for the answers to specific questions in your situation.

Reply by MikeC/NY on 9/21/07 12:26pm
Msg #212444

<< all situations could have been avoided if the BO read their statements and kept on top of things>>

Unfortunately, many of them don't. I did a signing recently where the new mortgage had no escrow account, but the old one did. The borrower had no idea about what was going to happen to the money currently in escrow, or how the taxes were going to be paid. How do you not ask these questions?

Reply by Doris_CO on 9/21/07 12:52pm
Msg #212452

In my previous life, the company I worked for did not escrow on any mortgage loans. Some borrowers quite often just assumed that all mortgage loans had escrow and if the LO didn't mention it the borrowers just assumed the new loan escrowed like the loan being paid off. Then when they received the notices of unpaid RE taxes and HO insurance, they'd call the office ranting and raving. Fortunately, there were only a small percentage of borrowers that fell into that catagory.