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Escrow overage refund?

rfaliasrfalias Registered User regular
edited April 2009 in Help / Advice Forum
So I got a notice in the mail from my mortgage company that said I had a refund check that had not been deposited. This puzzled me.
Mortgage? Refund? Surely they must be mistaken...

Well, I found the check (dated 12/24/08) and luckily it does not expire for 180 days. What has me wondering is what the hell is an escrow overage refund and why am I getting one? (Not that I'm complaining, it's fairly significant)


Edited for the readings

rfalias on

Posts

  • japanjapan Registered User regular
    edited April 2009
    Smells like a scam.

    First thing to do would be to call your mortgage company and find out if they actually sent it.

    japan on
  • rfaliasrfalias Registered User regular
    edited April 2009
    Definitely not a scam. Came in their normal envelopes they send invoices in. The notice had my account number as did the check. If it's a scam and they have all of that, I'm fucked.

    rfalias on
  • BeazleBeazle Registered User regular
    edited April 2009
    Either your taxes or insurance went down. Most likely your property taxes have dropped. They estimate your yearly taxes when the set your mortgage payment sometimes it is too low and you have to write them a check at the end of the year other times you get money back.

    Beazle on
  • HedgethornHedgethorn Associate Professor of Historical Hobby Horses In the Lions' DenRegistered User regular
    edited April 2009
    Your escrow account is the portion of your mortgage payment that goes to pay property taxes and homeowner's insurance. The mortgage company estimates the sum of those two bills, divides them by 12, and tacks that much extra on to your payment every month.

    If they estimated wrong and have escrow money left over after paying those two bills, the law says they have to refund you what's left.

    Hedgethorn on
  • EggyToastEggyToast Jersey CityRegistered User regular
    edited April 2009
    I have an escrow account for my mortgage. How mine works is this: Each year, they send out an "escrow analysis" that covers the amount paid in, the times any bills were paid out from it, and the lowest balance. If the lowest balance is under the "target lowest," they increase the escrow an amount to make up for it.

    I just got a new one on Friday; the previous 2 years, the thing has gone up $50 each time. This time, they had an overage -- I was $700 over my "target lowest" at the lowest point over the last year, so my escrow went down.

    Arguably, I could have kept my mortgage payment the same and asked for a one-time check. Similarly, once I sell the house, I should automatically get a check for the remainder, but if I don't I just have to contact them.

    For my escrow, I did all the math when it went up the first time, as I could have paid a lump sum to keep my monthly payment the same. In my case, and very likely in yours and most everyone's, they don't charge any interest or fees for miscalculations in your escrow. In my case, the first year it actually went into the negative, and they covered it without even saying anything (it's their fault for getting the calc's wrong, after all). So, in your case, rather than adjusting your mortgage payment downward, they are cutting you a check for the surplus. It's legit, and a normal aspect of escrow management. They're just holding your money; if they're holding too much, they give it back.

    EggyToast on
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  • DragonPupDragonPup Registered User regular
    edited April 2009
    Generally for escrows on property taxes, the mortgage company errs on the side of charging too much rather than too little so it is likely real. Just give them a call tomorrow morning to be safe. I actually got one of these last year for like $300.

    DragonPup on
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  • HoundxHoundx Registered User regular
    edited April 2009
    I've received these a few times, it's totally normal.

    Houndx on
  • rfaliasrfalias Registered User regular
    edited April 2009
    Well, this is awesome.
    This will help with getting the new car next month!

    rfalias on
  • GanluanGanluan Registered User regular
    edited April 2009
    Last year, they way overestimated my property taxes so I ended up getting a couple grand back. What sucks is when they underestimate and you have to make up the difference.

    Ganluan on
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