Thursday, January 16, 2014

M wants to know if there is any way to get out of an escrow shortage caused by oversight in refinance.


We refinanced in August. The bank just sent us the dreaded escrow shortage letter. I called the company that handled our refinance and we tracked the error. The title company (so the guy says) only put our school tax on the paperwork. Then the refinance company missed that error and it all went through. The full tax amounts were all correct on all paperwork until title company missed the other taxes and sent paperwork back to company, then the company ALSO missed it. I feel that they are both at fault. 

      Fast forward to right now and by February 1st we either pay $1893 and our payment will still go up $100 (I understand that it must go up because they didnt factor all of the taxes.) or our payments go back to just $5 short of what they were before the refinance. This is a rental property so we refinanced to get a smaller payment and hope to sell within a year. (We are military and renting to prior military and we have an assumable VA loan). So, my question is, is there anything we can do besides scream from mountain tops which title company and refinance company not to use?

     The biggest issue I have is that we paid the title company $2,000 and they didnt do their job properly. The refinance company made money off of us as well and they also didnt find the error and processed the loan with incorrect numbers and we are the ones now paying for it. Do we have any recourse?


Good morning, M:

Here's the situation.  As the owner of the property you have personal knowledge of what the taxes are and should have been on the paperwork.  There are three parties responsible for reviewing the documents used at closing - the title agent, the lender, and the borrower.  Sometimes all make a mistake and miss an error.  It is always unfortunate but the taxing authority won't reduce the tax liability and you are the one who must pay it.

You could consult an attorney to see if there is any other option because you are military but I don't think in this case there is because the payments would have been higher from the initial estimates you had from the lender.  In any event, please check with an attorney, just in case.

Sorry this happened but I do believe the dreaded shortage is real and must be resolved.  Best wishes.


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