Refund on Escrow for Impound

NEW -> Contingent Buyer Assistance Program
paydawg

paydawg

Active member
Are Mello Roos fees built into the county property bills due on 3/1 and 11/1?

I have my property taxes impounded with my mortgage (BofA) and I just received a large check back due to an estimated overage in my escrow account to pay taxes.  The issue is, I don't know if it's correct.  I moved into a new construction home and the county hasn't established the property tax payment yet.  Does anyone know if the mortgage/escrow companies typically include the projected MR fees as well?  Or will I get sent a separate bill to pay my MR?

Thanks!

 
There are several ways you may have been given a refund. In all cases, be sure first to call your servicer and confirm what this is, how it was calculated, and get someones name in writing so you can go back to the source if the data is incorrect.

Here's what could have happened:

1) You buy for $1m. Your property taxes are calculated at 1.6% (Base, plus MR). The lender gets the 2nd 1/2 original tax bill (Builders cost, lot taxes only) and figures they've over collected. In this case, do not spend that check because it's an incorrectly figured refund. The County will reassess and notify the lender who then will ask for $$$ to pay the County.

2) You buy for $1m. Your property taxes are calculated at 1.6%. The actual taxes are 1.4%. The refunded difference between 1.6 and 1.4 is the amount you've been given.  Don't spend that check, because the initially billed Mello Roos might be higher once the County gets all of their data correct, sometime in June.

3) You buy at $1m. Your property taxes are calculated at 1.6%. The servicer gets the bill for the supplementals, but not the 2nd 1/2. (yes, this does happen....) believe they are over collecting, then refunds the difference between the 1.6% collected and the small amount on the Supplemental Taxes.  Don't spend that check either.

4) You buy at $1m. Your property taxes are calculated at 1.6%. You close in late December. Your property taxes are correctly balanced in your impound account. In this case it's possible that the seller/builder paid the 1st 1/2 taxes on December 10th, just as you did at closing. The refund might be the overpayment of the property taxes due. Don't spend this either because the seller may be due a refund and Escrow would need to be involved to sort things out.

It's not a matter of impounding for taxes and insurance as being problematic, but rather so many people involved at closing where mere errors are likely to be made. Once the County reassesses in June and the Supplementals are paid, the chances of additional impound account errors diminishes by quite a bit. If it becomes too much of a hassle, you can usually (not always....) cancel your impound account.

Word to the wise. I've seen situations where Supplemental Taxes aren't paid on time, and the servicer will not allow impounds to be removed. Why? Taxes take priority over every lien, and if you've shown that you can't pay your taxes on time (perception = reality) then the lender has a right to retain impounds, even if your LTV is low.

My .02c
 
Thanks for that thorough response. 

Well, since it's a new construction (we moved in summer), it's not #3 or #4.  No bill (nor supplemental) has been issued yet.  #2 seems possible, but my refund check is much larger than the 0.2% difference in tax rate.  The refund seems to be more like a 0.6% in tax rate. 

Is it possibly the lender did not include MR in their tax estimate?
 
This happened to me too on a condo property I own.  Somebody eventually came looking for it. Can't remember if the lender or the county directly contacted me to pay the difference months later. This is one of the many reasons I hate impound accounts. First and last time I ever did a loan with one.
 
You should check that you didn't pay county taxes at closing to the builder like I did for my CalPac condo. On new builds, some builders pay the entire year of taxes and buyer pays this to builder at closing. When I talked to the escrow officer they said builders do this because bifurcation of taxes doesn't occur right away. In this case, the bank won't pay the tax bill come this November or next February (unless there is some adjustment after the bifurcation has occurred) but has been collecting into an impound account.
 
You must log in or register to reply here.
Back
Top