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  1. #1
    Join Date
    Nov 2018
    Posts
    3

    Default My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    My question involves real estate located in the State of: Texas

    I am a first time home buyer as of November 2017. At closing the previous homeowners agreed to pay the property taxes for the entire year of 2017. So I ended up not having to pay property taxes for the year of the 2017. However, I received my first Annual Escrow Account Statment Nov. 2018 and noticed a shortage on my ecrow account of over $3700 thus meaning my new 2019 monthy mortgage payment would increase about $600+ a month....YIKES!!!!

    I called the mortgage company, who was not helpful and just told me to go to the tax office. I did some digging into my escrow account and discovered a disbursement of county taxes for 2017 for over $6000K (now remember, the previous home owners paid those taxes already)! So I looked at the county records and it shows that the title company we dealt with at closing, in fact, paid those taxes (as they should have). So I reached out to my lender who confirmed they also paid those property taxes for 2017 out of my escrow. They then told me, I should be contacting the county tax office because they will be the ones to reimburse the lender and than the lender will reimburse the funds back to my escrow.

    All in all, my question is, does this all sound correct? I have a conventional loan type. It seems to me, the mortgage company is at fault for paying someone elses taxes when they in fact where not my taxes to be paid. Why am I the one having to go back and forth between the county and the mortgage company? Is this a comman mistake mortgage companies make? How do I aviod this from happening again?

    Any information is much appreciated!

    Thank you,
    First Time Home Buyer

  2. #2
    Join Date
    Jul 2010
    Posts
    7,596

    Default Re: My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    Was your lender notified that the prior owner had paid the taxes?

    Your lender should credit your escrow account those funds back pending reimbursement by the county or they should just eat it for screwing up.

  3. #3
    Join Date
    Nov 2018
    Posts
    3

    Default Re: My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    I notified the lender that the previous owners paid the taxes. But the lender told me the county sent them a tax statement on my behalf, which is why they paid the taxes.

  4. #4
    Join Date
    Sep 2010
    Posts
    18,826

    Default Re: My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    They're full of it. If the taxes are overpaid, where did the money go? Does the county still have it (will they refund to you?). If they sent it back to the lender, why hasn't the lender credited it back to your impound?

  5. #5
    Join Date
    Feb 2008
    Posts
    1,100

    Default Re: My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    they were taxes on a property that you own. So if anything it was a communication error -- the tax bill should have shown a credit for the 2017 taxes that the prior homeowner paid, did it? Did it actually state the amount owed was $0? If so, it's a mortgage banking error... but I doubt you will get the mortgage bank to recalculate the monthly payment with escrow until those $s are back in your account.

    have you gotten statements or could you look on them online to see your escrow balance throughout the year? Where you could have seen the duplicate 2017 payment? Or did you get a tax receipt from the county?

    at this point it sounds like the county is the one holding the excess funds, and i am not sure why they aren't either going to refund the duplicate payment OR credit them against 2018 taxes -- have 2018 property taxes been paid yet?also? If not, make sure you tell the mortgage company NOT to make that payment (or to only make the balance/difference in the payment) and ask that they recalculate your monthly escrow amount. You may have to make one or two of the larger payments until this gets straightened out though.

    In all the TX closings I've been involved in, the seller pays the amount of prorated taxes owed into the closing and then the buyer is expected to take that part of the year plus their part of the year to pay the current year, even if the sale is late in the year, say November. I suspect that is why both the county and the bank expected your escrow to pay 100%. It's a bit out of the norm for the prior owner to agree to pay 100% of the year directly to the county and not have it go through the closing process and that amount not be escrowed into your mortgage at closing for the first partial years bill. So I can see why they screwed up.... hopefully they will fix it quickly now that you know what the issue is!

    That said, at a certain point (I think it is when you no longer need PMI or 20% of your mortgage is paid), you can choose NOT to escrow and save and pay the insurance and taxes directly rather than having your mortgage holder do it. At least that's how we did it on our last mortgage in Texas. Of course there may be some lenders that don't allow it in their contract. But you might check into it if you would rather have control of that $ AND you have the self control to save up over time.

  6. #6
    Join Date
    Mar 2013
    Posts
    16,669

    Default Re: My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    Quote Quoting tps21491
    View Post
    Why am I the one having to go back and forth between the county and the mortgage company?
    Because nobody else will do it and self preservation is nobody's business but your own.

    When I was finally able to get out from under mortgage companies 20 years ago I found 25 years of correspondence (a drawer full) regarding mistakes to my accounts.

    Yeah, it's common for mortgage companies to mess up and you just have to jump in and fix it. You can't prevent them from making mistakes, but you can monitor your account monthly to catch the mistakes.

  7. #7
    Join Date
    Oct 2006
    Posts
    15,111

    Default Re: My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    Quote Quoting adjusterjack
    View Post
    Because nobody else will do it and self preservation is nobody's business but your own.

    When I was finally able to get out from under mortgage companies 20 years ago I found 25 years of correspondence (a drawer full) regarding mistakes to my accounts.

    Yeah, it's common for mortgage companies to mess up and you just have to jump in and fix it. You can't prevent them from making mistakes, but you can monitor your account monthly to catch the mistakes.
    I have also seen mortgage companies pay the wrong person's taxes out of an escrow account. So its very important to find out whether or not that extra payment has been credited to your account. If not, it could be difficult to find it.

  8. #8
    Join Date
    Nov 2018
    Posts
    3

    Default Re: My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    I never recieved a statement for 2017, because I was not obligated to pay those taxes. I have checked with the county and they have record that the title company paid the 2017 taxes on behalf of the previous home owners (as they should have). My lenders name is no where, even though they are saying they paid those taxes on my behalf.

    Thank you for the advice on checking if they paid the taxes for 2018. I did check, they havnt as of yet. But they were going to pay them, which was that amount of $6,000 which is incorrect. I provided them with my 2018 tax statement, which is $4,900. They should hopefully be updating this. I just hope my lender will be reiumburing me the 2017 taxes they supposedly paid out.

    Your note about not doing escrow, I dont have PMI and I own more than 20% of my home. Can I ask my lender to remove my escrow and I just be responsable for paying the taxes and insurance? What are the risks of not having escrow?

    Live and learn I guess....?

  9. #9
    Join Date
    Feb 2008
    Posts
    1,100

    Default Re: My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    You will check your mortgage contract to see if you signed that you are required to have your mortgage company do the escrow, so I can't promise that it is doable. But you should at least try if you want to track it on your own. The risks are you don't save enough and owe a large bill at the end of the year when the bill is due. But we paid our homeowners insurance monthly and then did our own subaccount at our bank in our accounts where the monthly amount went so we had that balance at year end. Only real other risk is making sure you know all the bills that are currently being paid out of escrow (Property tax vs MUD tax vs homeowners insurance, etc)

  10. #10
    Join Date
    Sep 2010
    Posts
    18,826

    Default Re: My Mortgage Company Paid the Wrong Property Taxes Out of Escrow

    Actually, the first time my mortgage company screwed up a tax payment on the escrow impound (which they insisted I had to have), I told them that if they couldn't do it right I would and got them to cancel the impound.

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