I have a fixed rate mortgage and I am afraid that as Interest rates rise the mortgage company will try to recoup some of there losses by raising my monthly payment by increasing property insurance or property tax they require in escrow. Is that possible?
Can a mortgage company profit off the escrow account?
No. That is not possible. Your mortgage company has no control over your property insurance or property tax amounts. Your property insurance premium is dictated by your homeowner%26#039;s insurance company, and the local city or county sets the property tax rates. It has nothing to do with the mortgage company.
On a fixed rate mortgage, your payment will never change, unless you%26#039;re currently paying private mortgage insurance (nothing to do with property insurance), then it will go down once your loan balance reaches 78% of your original loan amount.
Your mortgage company cannot profit in any way from the escrow account (by collecting interest, or otherwise). The only time your payment can change in relation to taxes and insurance is if those amounts increase. If that happens, sometimes the lender will make you pay a little extra to %26quot;catch up%26quot; the escrow balance, because they had to pay out more than they anticipated.
Can a mortgage company profit off the escrow account?
that%26#039;s illegal....they cant even collect interest on the escrow account (with your permission maybe)
If you have a fixed rate mortgage and your lender goes bankrupt..you will only be sending your payments to a new location/lender.
THAT%26#039;S IT!
your escrow however does go up every year because taxes/ins goes up.
Can a mortgage company profit off the escrow account?
No, they are bound by what they must collect to realistically pay those invoices. They are allowed to collect a reasonable cushion to protect you from radical increases on the coming year%26#039;s bill but must be able to justify the increase by increase histories.
Servicer%26#039;s do not profit from escrow account activity. those funds are collected and paid out on the borrower%26#039;s behalf. Funds collected that are not needed for the intended purspose are refunded to the borrower either by rebate, application to lower the principal balance or retention in the escrow account to protect the borrower from future increases.
Escrow accounts are analyzed annually. That is when the borrower receives notification of either a defecit or an excess and the borrower%26#039;s options are explained.
Can a mortgage company profit off the escrow account?
no they cannot if you think they are trying to make extra money compare the intrest rate to the APR on the truth and lending if there is a good bit of differance you are being charged yield spread
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