Does anyone know if it is common practice to require 18 months of property taxes in escrow

[notadmblnd]

when closing a mortgage? Is that now the norm?

OK, a little more info.

The have included 4 months of escrow in the settlement charges. But in addition, they have charged me an entire year of property taxes up front. I just got off the phone with the title company and I was told that it is because the owner paid the taxes in advance and I am reimbursing him. How can the previous owner have paid in advance for a year when he hasn't been able to pay his mortgage, nor are the current tax bills due?

Why would a homeowner pay taxes in advance for a year, knowing he's losing his home, then expect me to reimburse. How would he even know how much to pay?

Can anyone tell me how to post a pdf?

[madrchsod]

1. never heard of this....

sounds like they want the buyer to pay the prop tax if they foreclose. there`s no way anyone should pay anything 18 months out.

[DURHAM D]

2. It has been awhile since I closed on a new mortgage but

I can tell you I have never before seen an 18 month escrow for property taxes. Is this just an initial requirement or is it over the life of the loan? Sounds like the lender is "borrowing" from you.

[Warpy]

3. No. You pay your taxes at the end of the year and the escrow

you build up during the year is supposed to cover those and insurance.

Somebody is scamming you.

[Lint Head]

4. This is a scam perpetrated by the lender.

Property taxes are annual. They want to make interest off of the extra m months of money. If they get everyone to agree to this it can add up.

[notadmblnd]

23. by the seller you mean?

this was a short sale. I don't think the owner paid taxes in advance, if the bank is making this charge, then I want to know why, right?

[Rage for Order]

5. Defintely not

Purchase or refi?

[notadmblnd]

13. purchase of a short sale

I wish I knew how to post the pdf

[Rage for Order]

16. It's possible...

That the mortgage company is collecting 18 months of escrows on page 2 of the settlement statement but you are receiving a credit from the sellers on page 1 for the bulk of it. However, without seeing the settlement statement I can't be certain.

The seller is responsible for all property taxes up until the day you take ownership, e.g. tomorrow, so make sure you are receiving a credit from the seller for any taxes that were assessed in 2009.

[notadmblnd]

18. can you tell me how to post a pdf?

[Rage for Order]

19. I'm not sure

I think the pdf would have to be posted to a website like snapfish or photobucket, and then you could copy the location and post it. Otherwise, if you PM me I'd be happy to try to help

[notadmblnd]

22. Thanks, I did

[mattvermont]

6. just closed a mortgage

and all I had to have were the 2 months since my last tax payout. Who are you working with?

[notadmblnd]

14. Ally formerly known as GMAC

[slackmaster]

7. I've never heard of anything like that

One time I did have to put into escrow money to cover a semiannual property tax payment that I had already paid. It was lame.

[triguy46]

8. No way its normal.

[RayOfHope]

9. Oh heck no. We're closing tomorow and didn't have to do that. n/t

[Tunkamerica]

10. I just closed a few months ago and it depends on when

you close, but it was done on a year to year basis. Pro-rated depending on the closing date. But, truthfully, some of the details went over my head so I might've missed something.

[liberal N proud]

11. I have heard of all sorts of things being put in escrow

Maybe a couple of months of taxes enough to cover a lapse is ownership or something. Never that long.

But real estate deals get loaded with all sorts of request.

[dixiegrrrrl]

12. Actually, you can demand to have NO escrow and pay your taxes yourself.

I did.
Financed thru the local Countrywide office ( did not know about Countrywide BS 5 years ago when I bought).
Because I paid 20% down, I demanded and got NO escrow, NO PPI, we pay property taxes and insurance ourselves.
If your mortgage people won't do that, shop elsewhere. Escrow is a rip off.

[noamnety]

20. We also refused the escrow.

We prefer to pay the taxes ourselves rather than let the bank profit off the use of our money for no apparent reason.

[Rage for Order]

21. Sort of...

If you borrow 80% or less of the value of the home you can generally waive escrows at no additional cost. However, if one finances more than 80% of the price of the home an escrow account is required unless an additional fee, usually .25 Discount Points (.25% of the loan amount) is paid at closing. Even then, in today's stricter lending environment some loan programs require that an escrow account be established no matter what. For example, if you get an FHA loan escrows are required in nearly all cases.

An escrow account is a good thing for people who don't have the financial discipline to save for taxes and insurance throughout the year.

[izquierdista]

15. Boo!

Half of that would still be more than plenty.

[tammywammy]

17. No

When I bought my house I think my escrow covered 6-8 months because I was closing during June. I'm in the middle of a refi right now and the credit union only requires them to have in escrow 4 months worth. Two extra months as hold over in case my taxes/insurance goes up.

You can also do no escrow and just pay your taxes & insurance yourself.