Removing ESCROW from mortgage - They are overcharging!

[floridacoast]

What is the name of your state (only U.S. law)? Florida

In advance, I would like to thank all replies for your assistance. My mortgage company has been notorious for overcharging me for the ESCROW payment (mine includes Property Tax & Insurance payments). But, this year, their "analyzed" amount was ridiculously higher than what they will need at the end of the year. I am tired of paying them a monthly Escrow fee that is earning them interest. I rather open my own account where I can deposit a realistic amount for my coming 2009 Taxes and HOI dues.

I have been with this company for 7 years and have an excellent history with them. Although I understand eliminating escrow payments may not be an option within the first 12 to 18 months of a mortgage or for customers with red flags, fortunately, this is not the case for me.

After spending about 75 mintues on hold and being bounced from department to department, I finally reached a rep whom informed me of the process. I would have to send a request in writing to eliminate my excroww BUT (and it is a HUGE "but") I would also have to pay a $399 "fee"??????

$399 fee?!?!?!?! Is this allowed? Is there anything i could look for or refer to in my original mortgage papers (or any Florida/general regulation) that I could use against them to eliminate this "processing fee"?

Please help! I would love to finally take control of my escrow without having to pay these greedy creetens any ludicrously high fee for a rather simple request.

Thank you

[seniorjudge]

What did your lender say when you asked your questions?

[FlyingRon]

You're not getting the interest of your own escrow account?

As SJ says, have you contacted them.. After mine screwed up a couple of things I called all ready to go loaded for bear and they were quite willing to forgo the escrow for me just for asking.

[floridacoast]

Hello,

Thank you for the replies. In response to each reply:

(a) What I mean about "not getting interest" benefits from my escrow is that, as far as i know, the escrow monthly payments I make to the mortgage company are not accruing any interest on my behalf. For example, I know that in 2010 my Taxes and HOI should be $4000. If I was responsible for it, that money would accrue interest in a separate online (FDIC) insured account that would earn 4 to 5% interest annually. The mortgage company is taking almost $6000 in escrow from me. Even though I realize I will get this money back at the end (overage), I am not getting any benefits by giving them the money directly. I am sure they accumulate the collected escrow monies into their own account where they solely benefit from interest gains ... not me. So, not only am I sending them TOO MUCH money to cover my future Taxes & HOI bills, but I lose money because I am taking my money away from an interest earning account.

(b) Yes, I talked to several people including a supervisor. they told me I would have to send a written request to cancel my escrow and that it would cost me a one-time $399 service "convenience" fee. Is this allowed? How can i fight them on this "convenience" fee they are requesting to cancel their escrow "service".

Thanks

[seniorjudge]

I personally believe most escrows are rip offs; but that is irrelevant.

I would contest that "convenience fee." Ask them (nicely) upon what do they base that?

Do some research.

[Zigner]

Originally Posted by floridacoast

Hello,

Thank you for the replies. In response to each reply:

(a) What I mean about "not getting interest" benefits from my escrow is that, as far as i know, the escrow monthly payments I make to the mortgage company are not accruing any interest on my behalf. For example, I know that in 2010 my Taxes and HOI should be $4000. If I was responsible for it, that money would accrue interest in a separate online (FDIC) insured account that would earn 4 to 5% interest annually. The mortgage company is taking almost $6000 in escrow from me. Even though i realize I will get this money back at the end, i am not getting aby benefits by giving them the money. i am sure they accumulate the escrow monies into their own account where they are benefit from interest gains ... not me.

Where do you think you can get a guaranteed investment vehicle that earns that sort of interest (with a $500 per month deposit)?

(b) Yes, I talked to several people including a supervisor. they told me I would have to send a written request to cancel my escrow and that it would cost me a one-time $399 service "convenience" fee. Is this allowed? How can i fight them on this "convenience" fee they are requesting to cancel their escrow "service".

Thanks

What do your loan docs say?

[floridacoast]

Originally Posted by Zigner

Where do you think you can get a guaranteed investment vehicle that earns that sort of interest (with a $500 per month deposit)?

You're right. It was a bit of a hyperbole. But I am getting 3.5% annual on my WAMU account ... It may not be much, but it would be better than nothing.


What do your loan docs say?

I will definitely look them over once i get home. All of this occured, today.

[efflandt]

I am surprised they did not tell you it was an appraisal fee or at least something that sounds sensible. It is customary for lenders to charge a slightly higher interest rate if you do not escrow.

You should have gotten out of escrow (and possibly lowered your interest) while the getting was good (before the mortgage meltdown). I bought my 1st home in 2002 and got out of escrow when I refi'd with my current lender in 2005 at lower fixed rate for 20 years. That shaved 7 years of payments ($62,000 interest) off of my loan for $170 total closing costs and an extra $30/month. They gave me interest bearing checking to auto pay my loan and do my own escrow, but have not required any minimum balance. So I partial direct deposit to cover loan payments and just deposit more shortly before insurance/tax is due so they can track payments.

But that was when my lender had opened so many branches that they were competing against themselves (different offers from different branches). They even gave me a free HELOC in case I need to borrow back paid principal.