Sunday, May 06, 2007

calculating the aggregate adjustment

Wow, I had no idea how many people were trying to figure that one out until the Do you like math? post went up.

The site is getting regular search hits with that query. Very interesting. If the explanation is not sufficient or you have other questions, please let me know.


Diane Cipa said...

PS: While to my recollection the original instructions for aggregate adjustment did not require a negative figure, I see that HUD does currently require that the adjustment be negative. It's not logical to my mind, but it's their game so we play by their rules. ;)

Mark said...

I also have a negative amount of $436. The money is not in my escrow.
My tax bill is going to be $400 short.
Does the mortgage company have it in a special account or someting?

Diane Cipa said...

The adjustment at closing was a negative amount which just reduced the amount you owed out of pocket at closing. They didn't collect it so it's not there.

Your mortgage lender has a few options for handling a higher tax bill. First, they probably set up your account with a cushion of two monthly escrow deposits in case of increases. If this money hasn't been used up yet because of other shortages, then they'll tap the cushion to pay the tax. If it isn't enough they will advance the funds and pay the tax.

Your lender has to right to increase your monthly payments to cover escrow shortage. They also have the right to ask you for a lump sum deposit if the shortage is too great.

Go back and take a look at the annual escrow account analysis statements. They will give you a history of the account. These reports usually come out in January.