Mortgage Servicing Fraud Forum
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TSIMMONS

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Posts: 3
Reply with quote  #1 
I recently received a bill from CHASE that I owe over $4,900.00 for an escrow shortage.  According to the bill; its an Annual Escrow statement.  The last escrow statement that I have received from Chase was in 2008.  I called and they confirmed.  Is there anything that i can do about this large bill.  If I add it to my mortgage payment, my house note increase $200.00 per month for 60 months to cover the amount owe.  iS THIS LEGAL???
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T. Simmons
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George Burns

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Posts: 42
Reply with quote  #2 
It depends on what caused the escrow shortage.

You say that you " called and confirmed" , but you did not say what it is that you confirmed. If you confirmed that the amount of the ill was "over $4,900" then you have not confirmed anything but the fact that they sent you a bill. You have not confirmed what the bill was for, what caused the bill, when was the charges incurred, who was paid the amount.

From what you posted you do not know why you owe, what you owe for. In fact you really do not know IF you really owe.
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Walt
Reply with quote  #3 

Quote:
I recently received a bill from CHASE that I owe over $4,900.00 for an escrow shortage. According to the bill; its an Annual Escrow statement. The last escrow statement that I have received from Chase was in 2008. I called and they confirmed. Is there anything that i can do about this large bill. If I add it to my mortgage payment, my house note increase $200.00 per month for 60 months to cover the amount owe. iS THIS LEGAL???
 

 

Jerking customers around with escrows and precipitating a "default" was a classic mortgage servicing fraud specialty of all of the subprime lenders during the bubble.

 

Usually, the borrower has a duty to keep the property taxes and hazard insurance paid.  Sometimes, the loan agreements expressly call for amounts necessary to pay hazard insurance, taxes, condo fees and primary mortgage insurance to be paid into escrow and then the lender pays the amounts due.  Escrows can and should be adjusted when taxes and insurance premiums are paid.

 

While the use of escrow arrangements gives the lender the interim use of the borrowers money and in many states deprives the borrower of the interest on these funds there is nothing inherently sinister about escrow arrangements.  These can be helpful in smoothing payments and assuring that the borrower has properly budgeted for amounts which come due at annual or semiannual intervals.

 

Subprime lenders used escrows as a pretext for soaking the borrower with additional charges in a variety of ways.  First upon any failure of the borrower to timely forward a hazard insurance policy or bill, the lender would often purchase a so-called forced placed insurance policy, often from an insurer that was either an affiliate or which was paying some sort of kickbacks to the lender.  These forced placed insurance policies were usually characterized by offering minimal coverage for amounts that were sometimes two to five times higher than the competitively priced policy selected by the borrower.

 

The lender then billed the borrower for this forced placed policy and juiced up the escrows, precipitating default.

 

When a borrower failed to pay the amounts demanded, additional late charges were added.  The lender would also make unfavorable credit reports about the borrower.  After a month or two, the lender would begin putting payments into a "suspense account" and not applying them to the loan at all.  Borrowers were then told that they were in default and late charges were added every month.  An additional amount of several thousand dollars, characterized as attorneys fees or loan modification fees were also added as a consequence of any workout.

 

Finally, the sub-prime lender would have someone offer to lend the distressed borrower a new sub-prime loan.  This new loan would soak the borrower with new fees at closing, often running into tens of thousands of dollars, would exact and additional penalty through payment of a "prepayment penalty".  The net effect of this arrangement was to "rescue" a borrower from one sub-prime loan, by simply putting the borrower into another with an even large loan amount, often at worse interest and other terms.

 

This was the sub-prime predatory lending model.

 

Generally JPMorgan Chase was not in this business.  However, when Chase purchased Washington Mutual, it folded this firm's sub-prime operation into its own lending model.  This included employing many of the dishonest people who worked for WaMu.

 

As George suggests, the first thing you need to do is carefully work through the math of your various bills, including tax bills, hazard insurance and the like.  You also need to look carefully at the escrow accounting.

 

It may simply be that the local politicians have run your property taxes up and if this is the case, then your complaint is with the tax assessment or rate rather than with the bank.  If you have been placed in a forced placed insurance policy, you need to find another cheaper policy and make sure that at the first policy opportunity that the expensive forced placed policy is replaced with a competitive policy.  You may need to PAY FOR THE POLICY YOURSELF in advance of the policy anniversary date and make sure to FURNISH A COPY OF THE NEW INSURANCE and CANCEL the forced placed policy.  Lenders will make this exceptionally difficult to do, because they want to leave you in the forced placed policy to rip you off.

 

You can use a Qualified Written Request to obtain copies of the forced placed insurance policy and the escrow accounting.  Good luck!  This may NOT be easy.  You need to be both persistent and thorough.  Generally, Chase is less predatory than many of the other lenders.  

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TSIMMONS

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Posts: 3
Reply with quote  #4 
I confirmed that I had not received an annual accounting for 3 years.  I called StateFarm and my homeowners ins. only went up $8.00 and my taxes only increased $200.  Chase states that I have a negative escrow balance of $2,800.00 and the rest is anticipated coverage from my homeowners ins.  They also informed me that they have to continue billing me for my homeowners insurance even after I told them that I would now pay statefarm directly.  They told me I couldn't.  I told them that I could cancel my escrow account and they told me that I could not, and if I do pay statefarm they will still bill me.  Please advise..... 
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T. Simmons
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George Burns

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Posts: 42
Reply with quote  #5 
I do not understand how you can conrirm that you had not received a annual accounting for 3 years. Who did you ask? Yourself?

In any case it does not matter if you did or did not. What matters is that you get it now. All you have to do is request that they send it to you for each of as many years as you want.

You should also request a copy of the Certificate of Coverage, which is something that they hould have already sent to you.

Cancellation of the force placed policy is done in writing. YOU DO NOT SOLVE PROBLEMS BY MAKING TELEPHONE CALLS. You simply demand that they cancel their insurance coverage and adjust their charges on your escrow account because you have existing coverage. Include your State Farm Certificate of coverage or other proof of that coverage. I do not know what your dates of coverage should be, but include the dates.

You really cannot cancel an escrow account since it is their creation. But you can dispute the entries made.

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TSIMMONS

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Posts: 3
Reply with quote  #6 
I confirmed the information with the Chase Representative.  Christy, Chase Rep, stated that because they have a vested interested in my home I could not cancel them from paying my insurance; because they will get a Declaration sheet from Statefarm; whom I have already notified that I do not want Chase handling my insurance any longer. 
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T. Simmons
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Walt
Reply with quote  #7 

Quote:
Cancellation of the force placed policy is done in writing. YOU DO NOT SOLVE PROBLEMS BY MAKING TELEPHONE CALLS. You simply demand that they cancel their insurance coverage and adjust their charges on your escrow account because you have existing coverage. Include your State Farm Certificate of coverage or other proof of that coverage. I do not know what your dates of coverage should be, but include the dates.
 

 

George is absolutely right that your communications with the servicer need to be in writing.

 

But you probably cannot cancel the forced placed policy by any communication with the insurer, though there is little harm in copying your communication to the insurer.  There is no privity of contract between you and the forced placed insurer.  The servicer is claiming that it is protecting its interests through the forced placed policy.  The servicer is entitled under the security instrument to hazard insurance protection of the property and is also entitled under the security instrument to purchase insurance when you have failed to do so

 

When you failed to timely and properly notify the insurer of the policy, it exercised its rights to put a far more expensive forced placed insurance contract into place.

 

If you have purchased another cheaper insurance policy and furnish the required proof of insurance to the servicer, then they cannot continue their charade that they have purchased the policy to protect their interests.  Of course, the forced placed policy provisions may very well have been written to preclude cancellation and refund.

 

Furnish your proof of insurance by certified mail.  Send follow up letters as necessary.  READ THE PROVISIONS OF THE SECURITY INSTRUMENT AND MAKE SURE THAT YOU ARE FOLLOWING THEM EXACTLY.

 

TAKE PARTICULAR CARE TO READ THE NOTICE OF GRIEVANCE PROCEDURES AND FOLLOW THESE PROCEDURES.

 

Make certain that you continue to pay EVERY REQUIRED MONTHLY PAYMENT SO THAT YOU ARE NOT IN DEFAULT.  If the servicer refuses to make the appropriate adjustments to the escrow going forward, you might consider bringing a suit against the servicer in small claims court.  It might cost the servicer more to defend such a suit than the amount in dispute.  You can only win such a suit if you carefully follow the provisions of the security agreement and the law and have copies of the certified letters that you sent.

 

George is absolutely right that the servicer will continue to jerk you around as long as you are foolish and think you are going to resolve this problem by taking to the servicer by telephone.  This is precisely how you got into this problem and you are only going to extricate yourself by being much smarter in future interactions! 

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George Burns

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Posts: 42
Reply with quote  #8 
Walt's comments brought to mind something that has worked in FL and NJ. I do not know if it will work in your state.

Since you cannot over insure property, insurers will cancel coverage as requested, regardless of what the mortgage says, in order to be compliant with either the law or industry practice (and as per the insurance contract). So if you notify the insurer that the mortgage servicer used, that there is other coverage in place, they will cancel their policy. State insurance law usually dictates that unearned premium must be returned. However, that would be a return to the mortgage servicer, who might or might not give you credit. But, at least you will have stopped some of the bleeding. 
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Walt
Reply with quote  #9 

Quote:
Since you cannot over insure property, insurers will cancel coverage as requested, regardless of what the mortgage says, in order to be compliant with either the law or industry practice (and as per the insurance contract). So if you notify the insurer that the mortgage servicer used, that there is other coverage in place, they will cancel their policy. State insurance law usually dictates that unearned premium must be returned. However, that would be a return to the mortgage servicer, who might or might not give you credit. But, at least you will have stopped some of the bleeding.

 

This is some really thoughtful and intelligent additional insight which I am certain is dead on correct.  The bottom line is that as George states insurance law is very often based upon the state in which the insurance policy is issued.  These laws vary widely from state to state.  Researching state law or regulation is therefore a very good idea. 

 

Many states have laws or regulations which are extremely pro-insurer, but a handful of states have some very consumer friendly insurance laws.

 

If you have a valid, paid up insurance policy in force which reflects the proper coverages consistent with the security instrument, then you have leverage to have the forced placed insurance policy canceled.  By contrast, if you hesitate and leave the subject property uninsured, even for a single day, or you fail to properly notify the servicer in writing consistent with the requirements of the security instrument, you create a pretext for this forced placed swindle.  The most crooked of the servicers have policies in place to "lose" or "misplace" your notifications.  It is essential to create a written record and to enforce your rights.  The swindle depends upon ignorant borrowers actually believing the oral representations of the servicer that the forced placed insurance policy now in force is an accomplished fact and cannot be canceled. 

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B
Reply with quote  #10 

When I was in Chapter 13 bankruptcy, Litton Loan failed to send me Escrow statements.  As soon as I emerged from Bankruptcy, I too was hit with massive arrears.  Just a guess, but if you were in Chapter 13 bankruptcy, it could be a similar situation.  If so, I'd recommend contacting your bankruptcy attorney...  

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