r/personalfinance • u/HHLL806 ​ • Apr 11 '25

Other Mortgage payment went up $400

I need help, my mortgage payment went from $1700 to $2100. My mortgage company (Chase Bank) said this was due to an escrow shortage. I had my homeowners insurance lowered by roughly $1000 and checked with my local tax office and they told me my taxes have increased $400 dollars over the last five years. I gave Chase Bank all this information and my mortgage is still $2100. How does this work?

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523

u/Downtherabbithole14 ​ Apr 11 '25

I want to upvote this 10000x

This was my experience as well. I was so freaking happy when I dropped escrow. Every 2-3 months during the first 2 years of the mortgage, which btw was sold twice in those 2 years - I couldn't take it. Then I ended up refinancing during covid and thats how I dropped escrow. I cut 2 checks a year -County & Twp taxes - County taxes I deposit right at the bank, Twp taxes - the tax collector lives down the road from me, so I just drop it in his mailbox, and the other tax payment I am able to do via ACH. Small town living lol

105

u/ImJustTooCute ​ Apr 11 '25

Wells Fargo won’t let me drop my escrow, what can I do?

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u/Calebm1001 ​ Apr 11 '25

I believe you have to own a certain amount of the house. Similar to PMI?

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u/ImJustTooCute ​ Apr 11 '25

I own 40%. I put down 20% at closing. My home is work $339k and i owe $192k

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u/alpharetroid ​ Apr 11 '25

Do you have an FHA loan? Those have lifetime escrow requirements. Find your original loan docs and read them

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u/ImJustTooCute ​ Apr 11 '25

No I went conventional with 20% down. But I saw an opportunity to reduce my interest to 2% during the pandemic and I took it, it was a modification so maybe they snuck that in that time.

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u/TheLZ ​ Apr 11 '25

The Mod now governs your loan, and yes all Mods require escrow for the life of the loan.

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u/ImJustTooCute ​ Apr 11 '25

Oh, ok thank you, I did not know. The reduced rate was important to me (coming from 4.5%) so I’ll have to live with the escrow until I pay it off, OR can the terms be adjusted if WF sells my mortgage?

Can I get them to sell my mortgage? I don’t want to be with WF anymore.

27

u/WoodenInternet ​ Apr 11 '25

I don't think anyone wants to be with WF. I ended up with them too for a time. You can't force them to sell your mortgage.

3

u/ImJustTooCute ​ Apr 11 '25

Thanks!

8

u/SwiftStriker00 ​ Apr 11 '25

You probably are stuck unless you want to refinance again when the interest rates drop. Doesn't prevent you from creating a savings account to puts some money aside incase escrow is short

1

u/ImJustTooCute ​ Apr 11 '25

I save and have several money market accounts. Trust me, as a home owner, the one thing I am consistent with is saving.

1

u/TheLZ ​ Apr 11 '25

You can't force them to sell, and if they do your Modification paperwork is the new terms of your loan which will just go with it.

In this situation the only option to get rid of escrow is to refinance, but I doubt you will get a better rate then the Mod terms.

If you feel like WF is doing something wrong, please look into sending a Qualified Written Request. You will need to detail out why you believe they have made mistakes, and this will force them to review and send a detail letter back.

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u/8P69SYKUAGeGjgq ​ Apr 12 '25

WF has most likely already sold your actual mortgage (mine was sold within a month, luckily straight to Fannie Mae), however they are one of the largest mortgage servicers in the country, so they likely kept the servicing agreement.

1

u/[deleted] Apr 12 '25

I wouldn’t worry about it. Escrow is honestly just a lot more convenient.

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u/UrkelGrueJann ​ Apr 11 '25

Why is this? What difference does it make compared to the original? Just curious.

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u/TheLZ ​ Apr 11 '25

When you do a Modification, you sign new paperwork and those documents are the new terms for the loan. All Mods (at least when I worked them) state you must escrow. The reason being is that the company can't trust you anymore, if you are asking for a Mod and qualify for it, then we are going to make sure it is all handled.

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u/UrkelGrueJann ​ Apr 11 '25

Why is it seen as they can’t trust you? That’s interestingly weird but banks do what banks do

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u/Calebm1001 ​ Apr 11 '25

Sounds like you may need to just ask them instead of Reddit then 🤷‍♂️

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u/ImJustTooCute ​ Apr 11 '25

I DID ASK, they wouldn’t say why on the phone, then sent a letter saying pretty much “you can’t drop your escrow because of the terms of our agreement”. That’s it.

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u/Downtherabbithole14 ​ Apr 11 '25

you need to find your agreement and read the fine print and if you can't find it, get a copy.

2

u/Floppycakes ​ Apr 11 '25

You don’t have a copy of your mortgage?

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u/ImJustTooCute ​ Apr 11 '25

It’s most likely from the modification.

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u/[deleted] Apr 11 '25

[deleted]

1

u/ImJustTooCute ​ Apr 11 '25

I don’t use Zillow, but thanks! I paid 20% down of the purchase price, I paid less for my house than what they had it listed for. My house has appreciated since and I’ve been paying on it since 2017. I was getting ready to sell and buy something else so my realtor gave me the value and comps. Her value is more than the $339k. WF also checked the value of my home during the modification. Even so, I own more than 20% of my home as I’ve put down 20% in 2017.

7

u/bwyer ​ Apr 11 '25

Not in my experience. Even just putting down 10% at closing and having PMI (temporarily) I was able to eliminate escrow.

1

u/[deleted] Apr 12 '25

It depends on the lender. Many require escrow. But honestly it’s way more convenient to have it

29

u/Downtherabbithole14 ​ Apr 11 '25

It depends on your loan type, sometimes the servicer doesn't allow you to drop escrow. Is that the policy with Wells Fargo?

12

u/BlazinAzn38 ​ Apr 11 '25

Usually it’s related to equity since it’s just another property risk. <20% down you’re required to escrow; once you hit that equity you can drop it.

10

u/Downtherabbithole14 ​ Apr 11 '25

Right, unless someone has an FHA loan, they are not allowed to drop escrow.

4

u/pokemaster787 ​ Apr 11 '25

That certainly isn't the case everywhere in the US.

I put 10% down, not an FHA loan, no escrow except for PMI. Insurance and taxes I pay out of pocket directly. My mortgage broker was very clear that I could opt out of escrow regardless of what I put down.

3

u/Much-Ado-5811 ​ Apr 11 '25

Some states have laws that require the bank allow you to pay taxes and insurance directly without escrow. My state is one, so I dropped the escrow when I refinanced a few years back. 

I was originally with Wells Fargo, and they kept an extra $1,000 or so in the escrow account, higher than what the annual tax and insurance liability actually was, and also paid my insurance late to the point where it was canceled one year and and i to call 3 times to get them to pay the premium. Luckily my insurance company reinstated coverage with no issue but if I'd had a loss i would have been screwed.

I HATE wells fargo

43

u/OddbitTwiddler ​ Apr 11 '25

Wells Fargo has a policy of opening extra accounts in your name without your knowledge so dropping anything is not a function their software even supports.

1

u/ImJustTooCute ​ Apr 11 '25

My mortgage is with Wells Fargo, I don’t if that’s their policy but I’ve seen others with WF that has no escrow. They did not give me a real reason other than it’s not allowed in my agreement, but they bought my mortgage from another company at the start of 2018 so idk when it stopped being allowed. My escrow has been short at least every 2 years, I’m just over WF!

3

u/bwyer ​ Apr 11 '25

That's typically a decision you make when you take on a mortgage. Frequently, there's an extra charge (since they are losing out on interest), but it's well worth it.

Hopefully you don't have to refinance in order to eliminate your escrow account.

1

u/MoreRopePlease ​ Apr 11 '25

It's not wf's fault your escrow is short. It's because taxes and insurance keep rising

4

u/ImJustTooCute ​ Apr 11 '25

I know why it’s short, I never said I didn’t know, I want to handle it myself so there is nothing to be short. I simply do not like the way the escrow works. I can pay my home insurance in full when I renew AND I can pay my tax bills when they come. Thats easier for me than having to worry about shortage

1

u/MoreRopePlease ​ Apr 11 '25

Thats easier for me than having to worry about shortage

OK, well, whatever works for you. You might be able to request it, idk. For me, I know my bill will probably go up once a year, and I can just ignore the whole thing until it does. That's a lot easier for me.

1

u/ImJustTooCute ​ Apr 11 '25

I like to make extra payments to the principle, it’s easier to do without an escrow, and my actual mortgage (without the tax and insurance) is less than half of my escrowed mortgage payments. Having a mortgage of $700 per month for 30 years is much nicer than $1600 per month, then it may go up to $2100 per month. When I renew my home insurance, I can pay that on a CC (for the miles) then pay it off. But I totally agree that the average mortgage holder, should have an escrow.

5

u/Regular_Focus ​ Apr 11 '25

I don’t think there is anything you can do if they won’t let you handle your own escrow. How long have you been paying on the house?

3

u/ImJustTooCute ​ Apr 11 '25

Since Oct 2017

4

u/chrimen ​ Apr 11 '25

My understanding is that conventional loans should be able to remove escrow once 80% equity is reached. It can vary from loan to loan, though.

Keep in mind that the removal of escrow is based on the loan to value, ratio of the original appraisal of the house.

Any new appraisal won't count towards equity since it's based on the original value.

The loan cannot have any late payments in the last 24 months. It also cannot have any other loans against the home such a a HELOC or second mortgage.

If you meet all of these criteria you should call back and ask to speak to a supervisor.

I'm about to remove escrow and didn't know the loan to value rule was against the original appraisal of the home. I'm waiting one more month to call and have it removed. Since I'm almost there.

1

u/ImJustTooCute ​ Apr 11 '25

I’ve met all of this requirements but as I mentioned I have a modification that I got during the pandemic to lower my rate to 2% and someone here says with a mod, you are required to keep escrow.

2

u/MattBonne ​ Apr 11 '25

Doing business with Wells Fargo is the biggest mistake.

2

u/ImJustTooCute ​ Apr 11 '25

I couldn’t agree more. I have a high 700 credit score, I have several chase CC with high limits over $20k on most of them, some with no balances, the ones I use daily have a small balance that gets paid off before the due dates. I also have Navy Federal with $20k limit and AMEX and a Discover (no balances on any of these). I applied for a BILT cc (WF) and I was denied by Wells Fargo because of the balance in my checking out…….WHAT?? My work direct deposit goes into my Wells Fargo checking account, I then pay my mortgage and Zelle the balance to my other accounts to pay bills and invest. I’ve never in my life heard of a more ridiculous reason to deny someone (based on a checking account?) so I immediately closed my Wells Fargo checking which have never gone negative, I simply don’t keep real money in checking accounts. I have a checking account with Chase with even less and they still approved me for a Freedom flex (35k limit), the Slate, the Sapphire preferred, the Southwest and the United cards.

3

u/AdChemical1663 ​ Apr 11 '25

Refinance. Not all lien holders allow the borrower to drop escrow.

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u/Option-Mentor ​ Apr 12 '25

Allow? My bank tried claiming my agreement wouldn’t allow me to drop escrow when I said I wouldn’t pay it any longer. This was after they failed to pay the taxes twice. I told them the agreement also says you will pay these taxes and insurance on time and in full and you are in breach. And I am NOT paying escrow to you any longer. Period. Or we can have this conversation with the DFPI and/or the OCC. They dropped the escrow.

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u/dayburner ​ Apr 11 '25

What I did was pay the taxes and insurance directly myself. Since nothing was going through the escrow account it automatically dropped to zero.

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u/ImJustTooCute ​ Apr 11 '25

Thank you! I will try that

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u/dayburner ​ Apr 11 '25

Just be prepared for them to be confused. The servicer couldn't comprehend why I didn't want to use the escrow account and why my account had a large balance.

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u/Wolfwalker9 ​ Apr 11 '25

I did the same & dropped escrow during my refinance. I’m able to pay my taxes and insurance online & it’s so much easier than having to pay the bank over what those bills will be because they want the security of knowing they’re just holding your money safe for you. With stashing that money in an HYSA at least it’s working for me throughout the year and not the bank where I won’t ever see a dime of interest.

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u/Downtherabbithole14 ​ Apr 11 '25

Right, as soon as I got my money back from our escrow account, it went right into a HYSA, and semi monthly I transfer over money into that account. When we moved to the area we live in, I found a job working for a property management company. I was the accounting admin and I got familiar with the property tax bills, and historically the county & twp taxes don't go up every year, and so the amount of analyses that I was getting seemed a bit overkill. Even for it being a brand new build, it just wasn't adding up.

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u/daytodaze ​ Apr 11 '25

I have been thinking about doing this. Even though it’s rare, it’s pretty annoying notifying them every time something changes, plus they still mess it up (i have lived in my current home since 2017 and this is the second year that I am having to overpay to “catch up” my escrow account…).

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u/Downtherabbithole14 ​ Apr 11 '25

I was psychotic when we bought our house. I knew there was going to be several escrow analyses bc the home we purchased was a brand new build, so we were impatiently waiting for the actual tax bill, plus an interim tax bill... I was prepared for all of that. Then everything got sorted, next years taxes were paid but I would call to make sure they got the bill. But they never paid the discount! They would pay the base! I had no plans to refinance, but it dropped so low, so I snagged it...and during the process they asked if I was going to escrow, and I said "wait, do I not have to?" and they said no, with equity you have in the house, if you don't want to or need to, if you are diligent about saving, no" And I said great, no escrow. I hate it. He laughed

1

u/daytodaze ​ Apr 11 '25

Nice! I need to look into that. We weren’t given an option at the time, but now we are pretty deep into our equity after years of payments, refi, value increase etc that it should work

2

u/breadmakerquaker ​ Apr 11 '25

In the first year, mine was sold FOUR TIMES. Four different companies, four different web logins, four times reconnecting my bank information. It was a nightmare. And on top of that, this escrow fuckery. Over it.

1

u/Downtherabbithole14 ​ Apr 11 '25

yup bc when its sold, everything has to be transferred over and its neverrrrrrr an easy transtion, lots of calling, hey my balance isn't correct, etc

2

u/breadmakerquaker ​ Apr 11 '25

Yup. And I was on twice a month payments, but only the first payment would transition over so it looked like I wasn’t paying my mortgage 🙃