The annual escrow statement that mortgage servicers send out might seem like a low priority for scrutiny, but Dino Frangos' experience underscores why it's worth a close look.
He purchased a home in Catonsville last year and says his servicer handled the $4,684 property-tax bill through his escrow account. Last week his escrow statement arrived with a projection that his taxes would double next tax year -- requiring a nearly $400-a-month increase in his mortgage payment.
He called to find out why. After spending some time convincing staff that this was indeed a change from the current tax year, he was informed that he has two parcels of land "and they 'estimated' the value of one of the parcels."
"I do own two parcels, one of which is very small in relation to the other," he wrote me in an email. "My property, which is around 1/2 acre, also has a very narrow parcel of just a few hundred square feet along one edge. The value of that parcel doesn't amount to much."
But the mortgage servicer assumed the two were of equal value, for some reason.
"They admitted that it was a mistake, but it will take them almost a month to fix this," Frangos wrote. "I have to say that I'm concerned about a bank that can make such a significant mistake in its 'projections.' To top things off, the person I spoke to on the phone said that I'd likely have to go through this every year when my account is reviewed."
He has enough equity that he could scrap the escrow account and pay the taxes himself. He's thinking of doing just that.
"It would be much, much easier," he said.
So check those escrow statements, folks. And if you find an error, keep on it until you have proof it's been fixed. (Here's a piece about record-keeping problems, including insurance-related escrow issues.)
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