Short Sale - Insurance paid by who????

[ItsJustMe]

We sold our home as a short sale, hoping to avoid months/years of waiting for it to foreclose so that we can move forward and 'start the clock'. It went through 3 escrows and did finally close. The insurance was canceled a few months ago when the house was set to sell. We get the banks 'no insurance' letter and they are supplying their own, etc.

Escrow finally closes/funds but they did NOT account for the due insurance $ in escrow. Shouldn't this have been included in the pay off???? After funding the bank calls escrow saying they need payment and escrow pays it 'on our behalf' and is now begging us for $$.

Are we legally obligated to pay this? The house was IIB, last payment was the month of filing. Insurance was canceled 3 months ago (so about 7 months after last payment). We are in CA

[ItsJustMe]

BTW, We are in CA. Tried to edit and it wouldn't let me. Sorry.

[ItsJustMe]

Bumping with our new twist to this tale.

Today we received a check from BoA for our Escrow Balance Refund. $6,900. Is this money really ours? Should I cash it?

By the way, we never heard form the bank regarding the insurance (from my first post) and we haven't heard from the escrow company, either. It was the agent (ours) who had called to tell us about the insurance mess and wanted us to come up with the money. We told her no way and she told us that we were required to pay it. We ignored her and haven't heard from anyone regarding that issue.

[panda]

After reading this I am going to make sure we give our insurance company a signed letter canceling our insurance, I think we will take it into our local office and make them sign for it as well.

Unbelievable about the escrow, it will be interesting to see what you come up with on that, please let us all know how that turns out.

[ItsJustMe]

The insurance $$ isn't an issue with my own insurance company, it was the insurance provided by BoA. Because our personal insurance was canceled, they insured it on their own and I guess they forgot to tack that amount on to the payoff and then demanded that it be paid in escrow. Supposedly the agent paid it (supposedly it was a few thousand but the bank was willing to accept just under $1K) and she wanted us to take that money to escrow. She claimed that we were legally obligated to pay it and that we would be billed. The house (finally) closed just over a month ago and we haven't heard anything.

The check from BoA. I'm just not at all sure what to think of it. Everything was so messed up all along. The house was not a short sale on Bank of Americas side, just the 2nd. Even with a year of missed payments and the insurance and all the fees and the costs of selling the house still sold for well over that loan amount. Both loans (1st and 2nd) would have been almost entirely funded with our first offer (including the RE fees), but 7 months later when the banks finally approved it the home value had gone down and the costs had added up. Still, though, it was only short on the 2nd. BoA somehow convinced the 2nd to take almost nothing ($5K, I believe).

I have no clue what this check is for. Why would our escrow (BoA) account have money in it? Wouldn't they have used that to pay the taxes and insurance for the last year + ? I'm honestly not that surprised that they were somehow 'overpaid' because things were so messed up and they were so convinced that we owed them more than we did, but by the time escrow actually closed the numbers were looking correct.

I'm going to put the check in savings and just wait. I just don't get it at all. If it really is ours, awesome. But I don't understand at all what the money is for.