Short payment on escrowed mortgage

[MuDoggie1]

MA

My mortgage payment is set as a recurring bill pay item.

The payment was 2800 p&i+ 150 escrow = 2950. Billpay is set up as $3000 on the 1st of each month.
After escrow analysis, escrow increased to 200.12. New payment = 3000.12. My mortgage company claims they notified me of the increase by email. I don't recall or have record of that email, but it is possible that I deleted it as they send frequent (about 10 monthly) emails with tips and offers that are not of interest to me.

I was .12 short on my last payment. I was assessed $140 fee, reported to the credit bureau and sent to collections. When I contacted my mortgage holder, they claimed this is required process according to government regulations.

I am refinancing with another lender, but I am curious to know if this is normal and accepted process?

 

[Zigner]

Let me restate your post...maybe it will help you decide the answer on your own:

I was short on my last mortgage payment (causing it to be "late"). Per my lender's clear guidelines (as communicated with me when I obtained the mortgage), I was assessed a fee and the late payment was reported to the various credit agencies. Should the mortgage company have proceeded with their clearly established and communicated guidelines in this situation?

With all that said...yeah, it's pretty sleazy for them to do this over 12 cents, but they are doing what they said they'd do.

 

[adjusterjack]

One of many reasons to pay off your mortgage as quickly as possible.

Mortgage company s---bags.

 

[bcr229]

One of many reasons to pay off your mortgage as quickly as possible.

If you were one of the lucky homeowners whose mortgage interest rate is well below the inflation rate, paying the loan off early makes no financial sense.

I don't have any bills on autopay for precisely the reason described by the OP - the amount of those bills can change unexpectedly and not paying enough means that you get hit with late fees and penalties. Yes, it's a bit of a chore to manually set up every payment each month but at least I know the bills get paid in full and on time.

 

[LdiJ]

If you were one of the lucky homeowners whose mortgage interest rate is well below the inflation rate, paying the loan off early makes no financial sense.

I don't have any bills on autopay for precisely the reason described by the OP - the amount of those bills can change unexpectedly and not paying enough means that you get hit with late fees and penalties. Yes, it's a bit of a chore to manually set up every payment each month but at least I know the bills get paid in full and on time.

I don't even consider that to be a "chore". What does it take? Sixty seconds at the worst to manually make a payment with online banking?

 

[FlyingRon]

I avoided escrow impounds like the plague. They're fraught with abuse by the lenders. I relented on one company as they gave me a substantially better rate if I accepted the impound. Less than three months later (after the note had been sold twice), they forgot to make the tax payment. I was a bit irate and told the customer service agent that if they couldn't make the payments right, I'd rather handle it all myself. She said no problem, and canceled the impound and refunded what they had in the account.

I'd make the inquiry with your lender.

 

[LdiJ]

I avoided escrow impounds like the plague. They're fraught with abuse by the lenders. I relented on one company as they gave me a substantially better rate if I accepted the impound. Less than three months later (after the note had been sold twice), they forgot to make the tax payment. I was a bit irate and told the customer service agent that if they couldn't make the payments right, I'd rather handle it all myself. She said no problem, and canceled the impound and refunded what they had in the account.

I'd make the inquiry with your lender.

Years ago, I had a similar problem with a lender (only it was insurance rather than taxes) and they also agreed to cancel the account and let me handle things myself. Six months later, after the note had been sold, I made my insurance payment again and the new lender went ballistic, paid it again and made the insurance company refund the payment I made to them. They insisted that they had the right to have things in escrow.

 

[bcr229]

I don't even consider that to be a "chore". What does it take? Sixty seconds at the worst to manually make a payment with online banking?

Well... 15(ish) online payments per month for various utilities, credit cards, the mortgage, etc. so yes it's a "little" monthly chore to set them all up. Still wouldn't do autopay though.

 

[Zigner]

I have a sheet (a spreadsheet, but in a different program) that includes links to all bills, etc. I can simply click on the link next to each bill's entry and go to pay it, then I mark it as paid on the sheet.
I've moved most of my payments to auto-pay, but I verify each one each month.

 

[adjusterjack]

They insisted that they had the right to have things in escrow.

They probably do. Read your loan contract. I'm guessing it's in there.

 

[LdiJ]

Well... 15(ish) online payments per month for various utilities, credit cards, the mortgage, etc. so yes it's a "little" monthly chore to set them all up. Still wouldn't do autopay though.

It takes me less than 5 minutes, using online banking, to pay that many bills. There is nothing to "set up". Everything is set up, I just go in and tell them how much.