To Add Non-Ad Valorem, or not to add Non-Ad Valorem in escrow?

7 Replies

We've always had both Ad Valorem and Non-Ad Valorem taxes collected in our escrow impounds by default (not at our request). Our new mortgage does not include Non-Ad Valorem (special assessments like trash) in the impounds. We're instructing them to include them going forward.

Is it common for lenders to not include Non-Ad Valorem? About what percentage would you say? 

Also, who is responsible for getting the taxes correct at closing? Lender or Title? Both are pointing at each other.

Originally posted by @Geoffrey Pierce :

We've always had both Ad Valorem and Non-Ad Valorem taxes collected in our escrow impounds by default (not at our request). Our new mortgage does not include Non-Ad Valorem (special assessments like trash) in the impounds. We're instructing them to include them going forward.

Is it common for lenders to not include Non-Ad Valorem? About what percentage would you say? 

Also, who is responsible for getting the taxes correct at closing? Lender or Title? Both are pointing at each other. 

Please note that "Ad Valorem" may pragmatically mean something different in Florida, I can only speak to California.

In California, we see out of state lenders, including big national brands that do VERY high volumes (1-800-Q-----n just today), screw up state specific property taxes all the time.

What that looks like for me is "hey Chris your competitor is only charging $4000 for property taxes, why are you charging $7000? Are you trying to rip me off?!"

First, I'm not "charging" anything, I'm "estimating," and I'm doing so as accurately as possible. Second, do you want a surprise bill in the mail a year from now for $3000, or not? That's the only choice here, loan officers do not dictate what property taxes are.

You seem better informed than most Geoffrey, but I think that's really what it boils down to here. I don't know Florida property taxes, but I assume you do. Don't assume someone from out of state, and that would include me if I got my Florida license, knows your property tax regime better than you! If they under-collect but you still want to work with them even though they might screw a bunch of other state-specific things up, go right ahead and start budgeting for that surprise bill right now.

@Melvin List might be able to speculate or shed further light. 

Thanks, Chris. As a layman outside that part of the REI industry it boggles my mind how they can screw up taxes. Took me 1 minute to look up my parcel on the collector's site and review the taxes for the last five years; all within $100 or so variance. I would imagine if other counties don't have the online access my county does that a quick phone call would clear it all up.

What are they doing to estimate taxes if not contacting the tax authority?

I've never had a mortgage company Escrow anything besides property taxes and insurance. They don't hold out for assessments, required sewer payments, or even HOA fees, which I would appreciate and they would probably like to know are being paid.

I don’t know where you’re finding properties where the taxes haven’t changed more than $100 in five years but that’s insane. $100 per year increase is glorious. $1000/year happens. 

I’d have everything possible put in there. With 15-20 Hoa payments per month at least a couple times per year I’ll get a notice I’m being fined for not paying one, even though they are all on autopay with the bank and I assume the check was lost or misdelievered. 

Originally posted by @Geoffrey Pierce :

Thanks, Chris. As a layman outside that part of the REI industry it boggles my mind how they can screw up taxes. Took me 1 minute to look up my parcel on the collector's site and review the taxes for the last five years; all within $100 or so variance. I would imagine if other counties don't have the online access my county does that a quick phone call would clear it all up.

What are they doing to estimate taxes if not contacting the tax authority?

 So FYI there's a decent amount of money to be made on doing mortgages. 

If a LO is in a call center, most of that is being harvested by middle management leaving them with pennies on the dollar. That means, by necessity, they MUST do really high volumes, throw as much spaghetti at the wall as possible, see what sticks.

In that context, I would not at all be shocked if they were just guessing. 

Originally posted by @Melvin List :

@Geoffrey Pierce Both should be listed on your tax bill and collected in escrow if you chose to have an escrow account

Thanks, Melvin. The lender says they don't include Non-Ad Valorem. Title says they include them (but didn't include them). Another title company said it's about 50/50 if lenders do or not. Clear as mud! :)

I berated the lender for not including them as it seems defacto that the assessments are as required and lienable as taxes, and again, busy or not, a 1 minute check or phone call to the collector. 

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