Mortgage escrow property tax check to county bounces

[vees]

My mortgage company, American Home Mortgage, sent a check from my escrow to the county for my property taxes. When I called the county to find out why it never got applied to my tax statement, they told me they got the check but it "wasn't honored" by the bank when the county tried to cash it. The county was graceful enough to waive the $35 bounced check fee, but now I owe $806 in bi-annual taxes. When I called, AHM said they are taking care of it and to call them back in a week.

 

AHM went into bankruptcy protection at the beginning of this month. What are my options besides just waiting and hoping for the best?

[Brian B The Loan Professor]

Your other option is to Pay the bill.....

 

 

I think I would just wait.

 

It is likely to work itself out and the chances are they aren't going to foreclose for unpaid taxes right away

[centex]

Rather than "just waiting," I would be inclined to have a sit-down meeting with someone in the appraisal district to explain what is going on and get them to commit in writing what the options happen to be. Some counties are going to be more aggressive than others, if not in the foreclosure then in the assessment of penalties for late payment of the taxes. And if the county won't wait, then it is better to know NOW and cut the check rather than get stuck with penalties at a later date. Besides...its only $800.

[plcl]

I would call back and ask for someone higher up and demand to have a cashiers check for the penalties and late payment air freighted on a certain date to them or legal action they took your money out of your payments and now they are not honoring if it were you or I that would be considered fraud.

 

cheryl

[DesertRose]

We've had an ongoing servicing nightmare w/AHM long before they went BK.

 

We bough a rental a coupla yrs ago, 20% down, no impounds, no problem.

 

About 1 1/2 yrs into it, AHM suddenly added an extra $400/mo to our payment for . . . yup impounds. Like, WTF?

 

A few zillion calls to CS, nada zip. We keep sending checks for taxes & insurance on our own when we get the bills.

 

So we take a double hit tho the ins co is pretty good about refunding it promptly.

 

I even went to our AHM AE, no result.

 

Just as we file the RESPA complaint, they go sideways.

 

Swell.

 

I've no clue how long this will take to clear up. But now that it's in BK a trustee should eventually have people reviewing their files & unsnaggling this mess. If they have filed, there is no way to pursue them legally other than via the BK court by way of a creditor claim.

 

But ultimately the property owner is responsible to get the taxes paid. The tax collector isn't a party to the contract w/AHM that says they'll pay it via impounds.

Edited August 25, 2007 by DesertRose

[vees]

Thanks for all the replies. I fully intend to just pay the tax bill if if comes to that. There's just something very wrong with the situation that I'm in and I was hoping someone on this list had some ideas on how to light a fire under AHM to hasten the process or give me a little more respect. They are not even past-due for another 3 months but right now I get an early payment bonus that lowers the payment to $806. The longer I wait, the more expensive it is. And who wants to pay more taxes?

 

DesertRose: Wonder if perhaps that strategy was with all the sub-primes AHM didn't have enough COH to pay the bills and needed to "hold on" to more of it's good customer's money?

[DesertRose]

Yes I wonder what AHM was up to. If they did this to enough borrowers it would sure add up.

 

We're going to look into filing a creditor claim w/the BK court.

[vees]

Seven days later, and still my property taxes remain unpaid. On the phone with AHM customer service now, hoping for a positive resolution.

[plcl]

Have you notified your state attorney general so that they can make others aware of what is going on and also maybe get involved

 

thanx

cheryl

[vees]

The CSR in the American Home Mortgage Tax Department I spoke to today promised to refer the matter up the chain to his supervisor, and put a note into the file to call me back when everything is resolved. He also assured me that all fees above the $806 early payment amount would be eaten by AHM. I'll be loading up my tax records on the county web site every day until I get that return call.

 

.... Edited to clarify who's tax department I was talking to.

Edited August 31, 2007 by vees

[centex]

As I indicated in the earlier post...I would have already been in the Tax Office for the county. I would not be waiting on a servicer to fix the problem.

[Zib]

I would contact the AG and the FTC. The fact that they bounced your tax check means they co mingled funds. It could be a criminal act. I would go ahead and pay the taxes and go after AHM in tandem.

[Jeffmo32]

As I indicated in the earlier post...I would have already been in the Tax Office for the county. I would not be waiting on a servicer to fix the problem.

 

I thought escrow money was supposed to be held by an independant third party ?

 

I personaly would pay the tax bill (again) and wouldn't hold out much hope that AHM will be paying it back.

 

After all, the tax office doesn't care that your money is held in escrow by the Mortgage Co. or their escrow Company - It's you who is on their rolls, and it's your house that will get the tax lien.

[vees]

I would contact the AG and the FTC. The fact that they bounced your tax check means they co mingled funds. It could be a criminal act. I would go ahead and pay the taxes and go after AHM in tandem.

 

Is it possible that the bounce was because the funds were/are frozen due to the bankruptcy? Would escrow funds be frozen with all other assets?

 

I will be calling AHM back tomorrow for a status update, after I investigate my options with Maryland AG today.

[Jeffmo32]

I would contact the AG and the FTC. The fact that they bounced your tax check means they co mingled funds. It could be a criminal act. I would go ahead and pay the taxes and go after AHM in tandem.

 

Is it possible that the bounce was because the funds were/are frozen due to the bankruptcy? Would escrow funds be frozen with all other assets?

 

I will be calling AHM back tomorrow for a status update, after I investigate my options with Maryland AG today.

 

The AG's office will most likely refer you to your state financial regulatory agency.

 

What's going to happen here is you will become a creditor of AHM.

 

Definitely some comingling of funds here.

[vees]

The AG's office will most likely refer you to your state financial regulatory agency.

 

What's going to happen here is you will become a creditor of AHM.

 

Definitely some comingling of funds here.

 

The AG did refer me to the Maryland Division of Financial Regulation to file a concurrent complaint against the bank that issued the property tax check from my escrow account.

 

They also said to file a consumer complaint against American Home Mortgage including supporting documentation and they would follow through even if the property tax bill was eventually paid.

 

So I now hold in my hand a complaint form for the AG and CFR which will be mailed tomorrow immediately prior to my next phone conversation with the AHM tax department customer service.

 

Thanks for the advice, everybody!

[Jeffmo32]

The AG's office will most likely refer you to your state financial regulatory agency.

 

What's going to happen here is you will become a creditor of AHM.

 

Definitely some comingling of funds here.

 

The AG did refer me to the Maryland Division of Financial Regulation to file a concurrent complaint against the bank that issued the property tax check from my escrow account.

 

They also said to file a consumer complaint against American Home Mortgage including supporting documentation and they would follow through even if the property tax bill was eventually paid.

 

So I now hold in my hand a complaint form for the AG and CFR which will be mailed tomorrow immediately prior to my next phone conversation with the AHM tax department customer service.

 

Thanks for the advice, everybody!

 

Commercial Law for Maryland regarding escrow accounts - see co-mingling

 

§12–1026.

(a) (1) In this section the following words have the meanings indicated.

(2) “Lending institution†means a bank, savings bank, or savings and loan association doing business in Maryland.

(3) “Escrow account†means an expense or escrow account which tends to protect the security of a loan by the accumulation of funds for the payment of taxes, insurance premiums, or other expenses.

( (1) A lending institution that makes a loan to a consumer borrower secured by a first mortgage or first deed of trust on residential real property and creates or is the assignee of an escrow account in connection with that loan shall pay interest to the consumer borrower on the funds in the escrow account at the greater of:

(i) A rate of 3 percent per annum simple interest; or

(ii) The rate of interest regularly paid by the lending institution on regular passbook savings accounts.

(2) Interest on these funds shall be:

(i) Computed on the average monthly balance in the escrow account; and

(ii) Paid annually to the borrower by crediting the escrow account with the amount of interest due.

(3) The lending institution shall annually provide the consumer borrower with a statement of the escrow balance.

(4) The provisions of this subsection do not apply to a lending institution that provides for the payment of taxes, insurance, or other expenses under the direct reduction method by which these expenses, when paid by the lending institution, are added to the outstanding principal balance of the loan.

(5) (i) This subsection does not apply if the loan:

1. Is purchased by an out-of-state lender through the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation; and

2. The out-of-state lender elects to service the loan as a condition of purchase.

(ii) Notwithstanding subparagraph (i) of this paragraph, this subsection shall apply if the out-of-state lender:

1. Sells the loan to a Maryland lender; or

2. Places the loan with a Maryland lender for servicing.

© (1) Except upon foreclosure, release, or as provided in paragraph (2) of this subsection, funds in any escrow account maintained by a credit grantor on behalf of a consumer borrower for use in paying taxes, insurance premiums, and ground rents may not be used:

(i) To reduce the principal; or

(ii) To pay interest or other loan charges.

(2) If there is periodically a balance in the escrow account maintained by a credit grantor on behalf of a consumer borrower which exceeds the amount stated in the agreement, note, or other evidence of the loan, the consumer borrower shall be given at least annually the option of:

(i) Receiving a refund of the excess amount;

(ii) Applying the excess amount to the payment of principal and interest; or

(iii) Leaving the excess amount in the escrow account.

(3) A refund of any excess amount shall be made:

(i) Within 60 days after the receipt by the credit grantor of the consumer borrower’s request for a refund; or

(ii) If the consumer borrower has not notified the credit grantor of the option chosen by the consumer borrower, within 60 days after the date the credit grantor mailed notice of an excess amount.

(d) (1) Funds in any escrow account shall be kept separate from and may not be commingled with the funds of the credit grantor.

(2) A credit grantor may place escrow funds received in connection with more than one loan into a single escrow account.

(3) In the event of the bankruptcy of the credit grantor, any escrow funds placed in any escrow account may not be considered to be part of the bankrupt estate of the credit grantor.

(e) A credit grantor may not impose a collection fee or service charge on the maintenance of an escrow account on a first mortgage or first deed of trust.

[vees]

On hold with AHM tax department CSR for 13 minutes, then hung up on. Things are not looking good for AHM.

[Zib]

I'm sure you have this info already-

 

Office of the United States Trustee

J. Caleb Boggs Federal Building

844 King Street, Suite 2207 - Lockbox #35

Wilmington, DE 19801

Phone: 302-573-6491

Fax: 302-573-6497

Attn: Joseph M. McMahon, Esq.

 

Lead Debtor:

AMERICAN HOME MORTGAGE HOLDINGS, INC.,

a Delaware corporation, et al. Case No.: 07-11047

 

Related Debtors

AMERICAN HOME MORTGAGE INVESTMENT CORP.,

a Maryland corporation Case No.: 07-11048

 

AMERICAN HOME MORTGAGE ACCEPTANCE, INC.,

a Maryland corporation Case No.: 07-11049

 

AMERICAN HOME MORTGAGE SERVICING, INC.,

a Maryland corporation Case No.: 07-11050

 

AMERICAN HOME MORTGAGE CORP.,

a New York corporation Case No.: 07-11051

 

AMERICAN HOME VENTURES LLC,

a Delaware limited liability company Case No.: 07-11052

 

HOMEGATE SETTLEMENT SERVICES, INC.

a New York corporation Case No.: 07-11053

 

GREAT OAK ABSTRACT CORP.,

a New York corporation Case No.: 07-11054

 

 

I would call the Trustee and tell them what has happened with your tax money. I would assume you are not the only one who has had this happen.

[vees]

I'm sure you have this info already-

 

Office of the United States Trustee

J. Caleb Boggs Federal Building

844 King Street, Suite 2207 - Lockbox #35

Wilmington, DE 19801

Phone: 302-573-6491

Fax: 302-573-6497

Attn: Joseph M. McMahon, Esq.

[...]

I would call the Trustee and tell them what has happened with your tax money. I would assume you are not the only one who has had this happen.

 

I didn't, but thanks for this. Since I'm already going to be writing two letters tonight, what's a third?

[Zib]

I'm sure you have this info already-

 

Office of the United States Trustee

J. Caleb Boggs Federal Building

844 King Street, Suite 2207 - Lockbox #35

Wilmington, DE 19801

Phone: 302-573-6491

Fax: 302-573-6497

Attn: Joseph M. McMahon, Esq.

[...]

I would call the Trustee and tell them what has happened with your tax money. I would assume you are not the only one who has had this happen.

 

I didn't, but thanks for this. Since I'm already going to be writing two letters tonight, what's a third?

 

 

What's a third? Huh?

[vees]

What's a third? Huh?

 

I could have phrased that better. Since I'm already writing two letters tonight to the state, its really no extra bother to write a third one to the feds on the same topic.

[Zib]

Ah!! Now I get it. I would recommend calling the Trustee and writing.

 

P.S. The EVP/General Counsel for AHM is

Alan Horn

516-396-7703

 

You might be able to rattle his cage a bit, by telling him you are contacting the BK Trustee and the AG as your escrow money is gone and you have to pay your taxes again. Trust me, they want no trouble with the BK.

[vees]

The CSR (Alex) told me that the funds drawn to pay my taxes the last week of July were frozen for "a couple of days" and it may take a few weeks to resolve my issue because they have to review what was probably a large number of checks to the county and find out what the disposition of mine was. He was unable to expedite or finish the process any sooner than a few weeks from now, but again promised again that the company would be responsible for all of the interest and fees associated with the late payment of the tax bill.

 

Obviously the answer isn't any consolation, and I will be typing, printing and mailing those three letters tomorrow with much of the information I have already posted in this thread and a few more dates and conversations from my notes.

[Jeffmo32]

It sounds like the accounts were frozen in the bankruptcy case, but this is clearly against Maryland law (see second to last line of commercial code above). There should not be any problems for you once they realize that the money sent to the Tax office was escrow money and not an asset of AHM.

 

I'm interested to see if there was any co-mingling of funds, not in your case, but in general for these subprime lenders. If there was, you can expect the fall-out to hit their auditors as well as lead the way for legislation regarding "independent" escrow account handlers.

 

I hate escrow and PMI.

 

So let me get this straight, the bank wants insurance if I default on the mortgage.........huh...........what about if they default !!!!! LOL

 

I have an idea to make money, go into AHM and offer to buy a mortgage they're holding, pick any-one, and pay .25 on the dollar, then renegotiate with the borrower better terms (for the borrower that is) and you can still make tons on money on your investment.

 

For example. I buy your mortgage from AHM for .25 on the dollar. The total outstanding amount of the mortgage is 300K and the terms are 30 years and 8.5% and I buy it for 75K. Then, after I hold the note I go back to you and offer terms of 30 years and 5.25% on the 300K. Everybody wins and I think you would make your initial cash investment back in 4 years or so.