Mortgage impound problems

Ask Phyllis: a blog series of frequently asked real estate questions.

Mortgage impound problems

Dear Phyllis,

I enjoy the variety of questions in your column. However, I don’t believe you’ve addressed mortgage impound issues yet. Nearly ten years ago, my daughter purchased her condo and refinanced into a 2.75% mortgage several years ago. About eighteen months ago, her lender suddenly began impounding her loan, even though she has always paid her insurance and property taxes directly. As a result, the escrow account keeps collecting money unnecessarily.

Despite spending hours on the phone with customer service and even escalating the issue to supervisors, she hasn’t made any progress. Refinancing isn’t an option, as she understandably doesn’t want to lose that low interest rate. She also hesitates to let the lender pay her property taxes, fearing they’ll mishandle the payments. Unfortunately, this isn’t a local bank she can walk into—it’s a large, impersonal lender with no nearby branches. How do you suggest she eliminate these mortgage impound problems?

Jenny

Dear Jenny,

Your daughter’s situation with her mortgage lender’s improper impound account is frustrating, especially given her low 2.75% interest rate and her preference to manage her own insurance and property taxes. Here are some steps to consider:

Document All Communications. She should compile a detailed record of all interactions with the lender, including dates, times, representatives’ names, and what was discussed. She should save emails and letters and take notes during calls. This documentation is critical if escalation is needed.

Send a Formal Written Complaint: Write a concise, professional letter stating the issue. The impound account was imposed without her consent. She has always paid taxes and insurance and wants the account removed and funds refunded. Demand a written explanation and escrow statement per RESPA, (a federal law regulating mortgage loans and real estate settlement services, lenders and brokers must provide disclosures, limit escrow accounts, etc.) to check for overfunding and request a refund. Please send it via certified mail.

“CC” (send copies of the letter to):
Dept. of Financial Protection, Consumer Services, 2101 Arena Blvd. Sacramento, CA 95834
Consumer Financial Protection, PO Box 2900, Clinton, IA 95814
Senator Sash Renee Perez, 1021 O Street #7630, Sacramento, CA, 95814

Best of luck in getting this resolved without having to hire an attorney.