ddsdenise
08-29-2006, 02:14 PM
We closed on a newly constructed home in January 2005 with Wells Fargo Home Mortgage. The closing went extremely fast. Most of the contact was by email. The loan officer (who, by the way, no longer works for Wells Fargo) talked us into a 2/1 ARM. (We had filed bankruptcy over 2 years prior but in February 2005 it would have been discharged for 2 years (15 days after the closing). Even though we had a bankruptcy, our FICO score was 675 and 700. We went from A+ credit to a bankruptcy. Can happen quick...2 children plus I had a medical situation, then my job of 19 years was cut from budget and then we relocated for a job.) We received an escrow disclosure statement and while I understand what it states. I wanted some input on the situation and maybe a suggestion on what I should do.
On our disclosure statement, the escrow on our mortgage was WAY short in the closing, by 2,500+. Our payments will be increased by 500.00+ a month. (AND I understand about how escrow can make your payments fluctuate.) My understanding in the closing was that we had an increase in the escrow amounts on the insurance and taxes for a “cushion”. It seems the taxes were only figured on the land only. Two individuals that I work with built homes at the same time and did not have a problem with their escrow. (Of course ,they didn't deal with Wells Fargo either.) I emailed our original mortgage loan officer and never received a response. Finally I contacted the branch manager and found out that he no longer works with Wells Fargo. I received this first explanation back from the branch manager:
“There are a couple of reasons why your escrow account could have come up short. If when you bought the home it was new and the prior year tax certification that we received was on land only. If you bought the home and the previous home owner had other exemptions that they were receiving on there taxes that you did not qualify for. If the tax rate and value of the home changed, if the homeowners insurance premium changed. Unfortunately we have to use old information from the previous year when we run our analysis on the account on how much to collect from you to put in your escrow account. There is a formal that is used on every escrow account to tell us how much to collect or give back based on any changes that have happened on your taxes or insurance. Is the loan being serviced by Wells Fargo Home Mortgage? If you send me your loan number and property address I can see if my assistant can look into it for you.”
I sent her my information and she had someone look into it and this is the explanation I received:
“Sorry for the delayed response.
I have talked with Servicing and have reviewed the escrow disclosure statement that I requested they provide to me. She is correct in that this loan was setup with taxes based on the land only. The 2005 monthly tax escrow amount was $XXXX. The HUD was calculated with this figure and there was no VEPD form submitted at closing or to WFHM after closing. They probably were told that the tax figures were inflated but unfortunately Doug most likely inflated the figures only on the GFE since the inflated figures never reached the HUD or a VEPD form. They are currently escrowing taxes and insurance paid out in 2005, as is the normal procedure.
The borrowers are paying the correct monthly mortgage payment based on the 2005 amounts that were paid out. The only reason that their payment would increase in 2007 is if the taxes or the insurance increase. The shortage will be paid in full by that time so there will not be a shortage to pay next year, as long as the taxes and insurance remain the same for 2006. Their anticipated 2007 payment will be $XXXX which is their current payment minus their current shortage.
Please let me know if any additional information is needed.”
(I know that I’m paying the correct amount, I have No other choice!) I inquired about the VEPD form (Voluntary Escrow Payment Disclosure). I asked what is was and why wasn’t it submitted and who was supposed to submit it… I received this response…
“That form does not have to be submitted to closing. We are required by law to collect taxes based on the current tax certificate on the property. If the VEPD form had been sent then we could have collected taxes on the improved value of the property. This allows the lender to collect on the higher taxes so your escrow account will not be short. The laws need to be changed as this is and has been a problem for customers. Unfortunately most customers do not question when there payment is alot less then disclosed on the GFE (because of the taxes) and only say something when there payment goes up to cover the shortage.”
I have always understood that not my mortgage payment but the escrow will make my payment fluctuate. I already know this. I want to know why there was a discrepancy in someone submitting that form. I thought there was a Federal Reg or something about escrow account disclosures submitted to HUD within a certain timeframe. But it sounds like they are saying nothing was ever submitted to HUD either. This whole situation hasn’t felt right and we feel as if we have been taken advantage of. Was this just a sloppy financing? Should I refinance now? Any assistance (besides giving up our home) or guidance would be appreciated. :confused: Thank you.
On our disclosure statement, the escrow on our mortgage was WAY short in the closing, by 2,500+. Our payments will be increased by 500.00+ a month. (AND I understand about how escrow can make your payments fluctuate.) My understanding in the closing was that we had an increase in the escrow amounts on the insurance and taxes for a “cushion”. It seems the taxes were only figured on the land only. Two individuals that I work with built homes at the same time and did not have a problem with their escrow. (Of course ,they didn't deal with Wells Fargo either.) I emailed our original mortgage loan officer and never received a response. Finally I contacted the branch manager and found out that he no longer works with Wells Fargo. I received this first explanation back from the branch manager:
“There are a couple of reasons why your escrow account could have come up short. If when you bought the home it was new and the prior year tax certification that we received was on land only. If you bought the home and the previous home owner had other exemptions that they were receiving on there taxes that you did not qualify for. If the tax rate and value of the home changed, if the homeowners insurance premium changed. Unfortunately we have to use old information from the previous year when we run our analysis on the account on how much to collect from you to put in your escrow account. There is a formal that is used on every escrow account to tell us how much to collect or give back based on any changes that have happened on your taxes or insurance. Is the loan being serviced by Wells Fargo Home Mortgage? If you send me your loan number and property address I can see if my assistant can look into it for you.”
I sent her my information and she had someone look into it and this is the explanation I received:
“Sorry for the delayed response.
I have talked with Servicing and have reviewed the escrow disclosure statement that I requested they provide to me. She is correct in that this loan was setup with taxes based on the land only. The 2005 monthly tax escrow amount was $XXXX. The HUD was calculated with this figure and there was no VEPD form submitted at closing or to WFHM after closing. They probably were told that the tax figures were inflated but unfortunately Doug most likely inflated the figures only on the GFE since the inflated figures never reached the HUD or a VEPD form. They are currently escrowing taxes and insurance paid out in 2005, as is the normal procedure.
The borrowers are paying the correct monthly mortgage payment based on the 2005 amounts that were paid out. The only reason that their payment would increase in 2007 is if the taxes or the insurance increase. The shortage will be paid in full by that time so there will not be a shortage to pay next year, as long as the taxes and insurance remain the same for 2006. Their anticipated 2007 payment will be $XXXX which is their current payment minus their current shortage.
Please let me know if any additional information is needed.”
(I know that I’m paying the correct amount, I have No other choice!) I inquired about the VEPD form (Voluntary Escrow Payment Disclosure). I asked what is was and why wasn’t it submitted and who was supposed to submit it… I received this response…
“That form does not have to be submitted to closing. We are required by law to collect taxes based on the current tax certificate on the property. If the VEPD form had been sent then we could have collected taxes on the improved value of the property. This allows the lender to collect on the higher taxes so your escrow account will not be short. The laws need to be changed as this is and has been a problem for customers. Unfortunately most customers do not question when there payment is alot less then disclosed on the GFE (because of the taxes) and only say something when there payment goes up to cover the shortage.”
I have always understood that not my mortgage payment but the escrow will make my payment fluctuate. I already know this. I want to know why there was a discrepancy in someone submitting that form. I thought there was a Federal Reg or something about escrow account disclosures submitted to HUD within a certain timeframe. But it sounds like they are saying nothing was ever submitted to HUD either. This whole situation hasn’t felt right and we feel as if we have been taken advantage of. Was this just a sloppy financing? Should I refinance now? Any assistance (besides giving up our home) or guidance would be appreciated. :confused: Thank you.
