The Finch Formerly Known As Gold

15 March 2008

Why the mortgage industry is in trouble

Two words: dubious math.

I am advised by the folks who hold my note — yes, George Kaiser, I'm looking at you — that my "account has gone through an escrow analysis cycle" and their projected expenditures for the upcoming twelve months will deplete the funds in escrow by a total of eight cents. To compensate for this deficiency, they are raising my monthly payment by $1.80.

In actuality, I think they've slightly underestimated my property taxes for the year, so I'm not going to send off one of my famed Letters of Protest. Still, there remains annoyance at slightly above vestigial levels, due to the fact that they're getting 0.3x, where x equals the actual principal-plus-interest payment, to screw around with for several months before they actually cut checks to the county and the insurance agent.

Posted at 10:40 AM to Common Cents

That's why, at the time I semi-owned a townhouse, during the refinance process I insisted of paying my taxes myself: canceling the escrow altogether. of course, having 30% equity helped.

Posted by: Tatyana at 11:07 AM on 15 March 2008

They assume that your taxes next year will be the same as they were this year which is a dubious assumption in this day and age. Same story with the insurance. At least there has been closer inspection of escrow accounts to be sure that they come as close to being only what they need to be with no real extra to "play" with.

Posted by: ms7168 at 12:31 PM on 15 March 2008

Why don't you handle your own escrow? It's perfectly legal to do in Oklahoma and we have never had a problem doing it.

Posted by: Dwayne "the canoe guy" at 7:43 PM on 15 March 2008

The thought has occurred to me, believe me.

Posted by: CGHill at 7:56 PM on 15 March 2008