Escrow Adjustment.... wtf? lol

[NoMoney30]

So, I just got my mortgage statement from Navy Federal's attorney with a notice that my payment is changing... by almost 400 dollars a month!! Unless I pay them 4,400 dollars! How the hell are they that OFF on my escrow?! I even switched to a cheaper insurance plan last year and went from 3,800 a year to 2,400 a year... like OMG... I realize I should contact my attorney and tell them I need my plan adjusted... but I have the worst attorney ever and I'm not sure what all they do when they modify a plan? Do they just adjust the payment down to meet the new bill? Are they going to scrutinize me again?

[justbroke]

Is it that they put force placed insurance? What's the specific reason for the escrow shortage? Did your property taxes change (as that could also cause an escrow shortage)?

Maybe they are now requiring you to escrow your insurance. If you tell them that you have a policy and it is in force, they may be able to adjust, but something is causing the shortage and you must get to the bottom of that issue.

[NoMoney30]

My loan is relatively new and I think this is the first time its been reviewed since I refinanced it. The taxes were estimated before and yea our taxes went up but apparently I've been running negative in my escrow for awhile but with the bankruptcy they just never bothered to true it up until now? I didn't pay attention because my statements were being mailed to the attorney and I no longer have access to anything online... so.... needless to say... LAME! My mortgage is an ARM and its scheduled to get adjusted next year in November also...so that's super fun.

I called them though and they are willing to submit a request for me to spread the shortage out over 36 months instead of 12 months. Which helps a lot... so, gonna work on trying to true it up as I can and then not have to involve my attorney.

[justbroke]

Running negative on escrow will do it. When the annual escrow adjustment is made, this can put you seriously behind. So when the escrow is recalculated, they have to take the deficiency and then recalculate in the new rate at which they must take escrow payments. This can make an absurd new monthly payment.

I had a similar issue when I filed, but mine was for insurance (our insurance here in Florida, near water, for a ~3,900 sqft home was over $3,000/month after all the hurricanes from 2004 despite it being 2009).

I'm glad they're trying to help. If they can't and it severely affects your Chapter 13, you may need to seek relief and have a judge weigh in.

[NoMoney30]

Yea, I guess I didn't realize it was so negative... I'm thinking they didn't estimate the taxes well enough when I refi'd it and didn't add enough cushion. I took the loan in 2018 and then filed my BK in 2019... so, I don't think they did an escrow analysis last year since it took almost 12 months for my BK to get confirmed.

Just curious though, they filed a notice to the court that my mortgage payment was changing... they won't care about that unless they hear from me that I need some sort of relief right?

[justbroke]

Correct. The notice is enough for the Trustee to adjust the payment. You would need to object in some manner.

[NoMoney30]

Sorry to be clear, when you say correct you mean they won’t do anything to adjust my payment unless I tell them I need to adjust it? They won’t do anything about it automatically right?

[justbroke]

I mean that the Trustee will adjust your payment when they see that notice. I wouldn't be surprised if a letter came from the Trustee informing you of the adjustment.

[NoMoney30]

What if I pay off the difference though and they don't need to make the adjustment?

[justbroke]

If you correct the escrow shortage, they will likely not need to adjust it "that" much. But, that will depend on the lender and how they deal with escrow shortages. Usually, they offer you to pay the shortage, or they will increase the escrow amount to a ridiculous amount.

[NoMoney30]

Right, they gave me a payment coupon and option to pay it and it says that if I pay it, the payment will actually go down by 5 dollars instead of up by 400 dollars. But I don't want the trustee to do anything... I did send an email to my attorney to ask them if they will just automatically adjust my payment but I just don't want to have to deal with the trustee at all and have them leave my account alone.

[NoMoney30]

So I actually got a response from my attorney if anybody is interested or wanted a "closing" remark:

"The Trustee will not take any action, nor will her Chapter 13 plan payment be adjusted up/down. If she chooses to pay the escrow change as a lump, technically an amended notice of mortgage payment is needed to reflect that the old escrow amount will remain in place until next year, - but the mortgage company probably won’t file it."

[justbroke]

You have a better Trustee than we do. Whenever our Trustee get a notice from the creditor regarding an ARM or escrow adjustment, the plan payment changes. At least from my experience. (Or, maybe in my case the creditor filed it correctly at the start.)

The downside for you is that this will eventually cause issues down the road.

[NoMoney30]

Ok, I'll bite... what "issues down the road" would this cause?

[justbroke]

Ok, I'll bite... what "issues down the road" would this cause?

It's just that many Chapter 13 debtors, even with no escrow shortages or other issues, find their mortgage account entirely wrong. Past due charges, interest and other issues can make it confusing and difficult to try to make sure the account is "current" at the time of discharge.

It's a common story and concern.