Mortgage escrow accounts are a minefield

10 Nov Mortgage escrow accounts are a minefield

Funny how legal issues seem to pop up in clusters on my desk: three different clients sent me their annual escrow analysis howling. Each of them was looking at an increase in their monthly payment of over $1000.

Each of my clients is currently in a bankruptcy proceeding, so we’re lucky in a way. We can resort to asking the judge for help if we can’t get things sorted out.

The common thread through this series of escrow statements is that the lender is trying to recover the pre bankruptcy monies the lender advanced to pay property taxes. That’s forbidden when the pre petition advance is also part of the lender’s claim. (It seems like the bankruptcy arm of the mortgage servicer never talks to the escrow analysis arm.)

The other, to my mind unforgiveable, issue was that for one client, the lender had overstated the current year tax rate, improperly increasing the monthly escrow charge by $250.

Having just come from a training for lawyers in escrow issues, taught in part by my colleague here Pam Stewart, this area of the law is incredibly complex. But it seems I have no choice but to master it, if my clients want to keep current on their home mortgages.

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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