My lender spent my escrow on taxes for the wrong parcel.

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My lender spent my escrow on taxes for the wrong parcel.

Robert Kriedermann
Rental Property Investor · Milwaukee, WI · Member since 2011 · 31 posts · 9 votes

A few years a go I purchased 2 duplexes from a single seller with cash that are about a quarter mile from each other on the same street.

Over a year ago I refinanced just one of the properties. The payment was $857.70 per month which included escrow for taxes and insurance. In Sept 2019 I received a letter from the lender that I had an escrow shortage of $3629.60 and I can either pay it now or they will increase my monthly payment to $1160.16 to cover the difference. I looked at my escrow information online and they paid not only the correct tax bill but also the tax bill for the other property on the same street that i do not have a loan on.

I called in October 2019 to sort it out but I got the run around. I kept calling every couple weeks but never was able to get the same person on the phone more than once. They have no method of reaching a person directly and I don't get anywhere when asking for a person by name and company ID number. Eventually I reached a supervisor who said they would look into it and would call me back with updates. They called twice more and each time they had a new date sometime in the future for when it was scheduled to be resolved by. Then they stopped calling. Every time I call I get someone new. Recently I checked and now they have paid the wrong tax bill a second time so instead of having a zero escrow balance after their first mistake, I have a -$2000 escrow balance.

What can I do? I don't want to pay an extra $300 per month so i can fill the escrow so they can use it to make another mistake with but I also don't want to stop paying because that will put me in default. I have been trying to get this fixed for almost 4 months and have made no progress at all. The bottom line is that they used my escrow money to pay something we had no agreement about and now they want more to do it again. I talked to a new supervisor today and they told me they would call back by the end of the week with an update. I've heard that before... The loan company is Specialized Loan Servicing. Does anyone have any advice?

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    6y
    Originally posted by @Robert Kriedermann:

    A few years a go I purchased 2 duplexes from a single seller with cash that are about a quarter mile from each other on the same street.

    Over a year ago I refinanced just one of the properties. The payment was $857.70 per month which included escrow for taxes and insurance. In Sept 2019 I received a letter from the lender that I had an escrow shortage of $3629.60 and I can either pay it now or they will increase my monthly payment to $1160.16 to cover the difference. I looked at my escrow information online and they paid not only the correct tax bill but also the tax bill for the other property on the same street that i do not have a loan on.

    I called in October 2019 to sort it out but I got the run around. I kept calling every couple weeks but never was able to get the same person on the phone more than once. They have no method of reaching a person directly and I don't get anywhere when asking for a person by name and company ID number. Eventually I reached a supervisor who said they would look into it and would call me back with updates. They called twice more and each time they had a new date sometime in the future for when it was scheduled to be resolved by. Then they stopped calling. Every time I call I get someone new. Recently I checked and now they have paid the wrong tax bill a second time so instead of having a zero escrow balance after their first mistake, I have a -$2000 escrow balance.

    What can I do? I don't want to pay an extra $300 per month so i can fill the escrow so they can use it to make another mistake with but I also don't want to stop paying because that will put me in default. I have been trying to get this fixed for almost 4 months and have made no progress at all. The bottom line is that they used my escrow money to pay something we had no agreement about and now they want more to do it again. I talked to a new supervisor today and they told me they would call back by the end of the week with an update. I've heard that before... The loan company is Specialized Loan Servicing. Does anyone have any advice?

    If in your shoes, I'd probably try to have the escrow account removed entirely. You did a cash out refi on a rental, which tells me you have at least 25% equity, assuming it was a Fannie/Freddie type loan.

    Right now you're calling them for something not on their computer screen, they don't have a script to read, error error does not compute.

    If you call to cancel the escrow account, at least now they have a script to read, a process to follow, etc. And my hunch (based on your equity and what little I know about you) is that you will qualify for whatever internal criteria they have for this.

    Post back & tag me, I'm curious to see how this plays out and/or is resolved.

    I actually disagree with my industry's bias in favor of escrow accounts. The software should auto-populate without them IMO, unless there's a specific reason (low down payment, bruised credit, down payment is 100% gift) to require it. 

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  • Joseph Hammel
    Rental Property Investor · Lake Hallie, WI · Member since 2015 · 292 posts · 144 votes
    6y

    What a mess. Question, what does the county say? Will they refund the money paid by the service company?

    Maybe you can send them a certified letter stating what they did in detail and give them a deadline to fix it. 

    Then try the AG office or whoever regulates in WI. 

    Finally if you don't get anywhere you could bring it to small claims court.

    Good luck!

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  • Robert Kriedermann
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2011 · 31 posts · 9 votes
    6y

    Resolution - They updated my escrow to remove the extra tax payment. They did not give me my money back but since the money was used to pay on a different property I own, It's not a huge deal. They basically took my money and used it to pay one of my other bills that I would of had to pay anyway. @Chris Mason

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