Financing in 21225>Question Details

Wayne Dunlap, Home Buyer in Baltimore, MD

I received a escrow refund check from my mortgage lender . Why is the lender giving me a refund instead of letting my escrow build-up over time?

Asked by Wayne Dunlap, Baltimore, MD Sat Sep 17, 2011

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Hi Scooby,

By law, your lender cannnot allow too much money to be held in your account based on what you owe for real estate taxes and insurance. It could be that they over estimated your escrow at settlement or that the amount you owe for real estate taxes and insurance has decreased this year. If you have concerns, give the lender a call before you cash it to find out why you are getting money back. But it is likely legitimate money that is due to you.
1 vote Thank Flag Link Sun Sep 18, 2011
0 votes Thank Flag Link Tue Sep 24, 2013
Lenders are required to do an aggregate analysis of your escrow account on an annual basis and adjust any shortfalls or overages. If you got a refund that means your account had more than enough money for both taxes and insurance based on past disbursements.

Bob McGee
Advance Realty Timonium
0 votes Thank Flag Link Sun Sep 18, 2011
It does not matter what your mortgage papers say, federal law stipluates how moch over they are allowed to have your balance. I believe it cannot exceed 10% of your prior years actual payout amounts, With housing prices droping this has caused tax accessments to finally drop. You probably paiid less property tax in the last 12 months compared to the previous 12 months. Check your tax bills. You also should see a slight reduction in your monthly payments based on lower required escrow requirement.
0 votes Thank Flag Link Sun Sep 18, 2011
Check with you lender, but I believe by law the lender can only hold the required escrow amount per the mortgage documents. Overages need to be returned and shortages are billed.
Web Reference:
0 votes Thank Flag Link Sun Sep 18, 2011
You can call your lender's 800 number and ask. They usually try to keep their books balanced annually so if you had a shortfall, they'd ask for additional funds; in this case you must have overpaid, and they're sending you a refund. You can always cash it and deposit it back in.
0 votes Thank Flag Link Sun Sep 18, 2011
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