Escrow by Mortgage Companies for RE Taxes

See:

How Do I Figure Escrows? by the mortgage professor

Understand Your Escrow Account from wells fargo

Real Estate Settlement Procedures Act Escrow Program from fdic.gov

All from the first page of an internet search using determining escrow account

No problem.

I was surprised that you hadn't done an internet search on the issue (or at least that was my impression).

On one of our mortgages we paid taxes and insurance directly without impound. I will never do that again because every time the mortgage was sold the new lender would realize there was no impound and freak out. We would then have to provide evidence of insurance coverage and no matter how many times we sent it the requesting party denied receiving it. Even if they did receive it this year, a different person would notice the lack of impound the following year and begin a whole new round of requests and denials. (It did not help that with that the mortgage was administered on different occasions by the two worst loan servicers of all time. One was so bad the government forced it to be sold.)

It saved us no money and created too many hassles. Our current mortgage has impounds for both taxes and insurance. The overall cost is the same without the unwanted drama. I would not recommend paying taxes and insurance directly because the mortgage industry is not equipped to handle it.

Larry and all

The issue of impound accounts really reared its head in the post-Vietnam inflation of the '70s, I was living in California at the time. One could earn 10% or more on ordinary market rate savings accounts. The thinking was, why should I let the mortgage company earn 10%+ on my impound money, when I can impound it myself in a savings account, and earn the 10% myself.

From the standpoint of the mortgage company, this presented two issues: 1) the property owner would not accrue the funds necessary with the resultant headaches for the mortgage company if the taxes and insurance were not paid, and 2) the mortgage companies would no longer have all those millions of dollars in impound accounts earning money at 10%--which many thought was the real issue as to why they fought so hard to retain the requirement.

I don't recall the details all these years later, except some, perhaps all, were no longer required to pay into impound accounts.

At today's market rates of less than 1%, I personally would not bother self-impounding.

Good insights all. Thx.