Thanks for the response. Actually, our property taxes stayed the same. That's why I'm so confused. I could see being short the $800 that our insurance was increased. But even without that increase, we would still have been short almost $800. What happened there? Is my mortgage company somehow to blame for this huge miscalculation?

-Jessica.

Here's how I understand it. Your escrow was short by $800. SO, they have to add in enough of a raise in your escrow payment next year the $800 that it was short (paying off last years shortage).
NOW, since you were short by $800 they must raise your escrow by $800 for the next year so you won't be short by that amount again.
That is why they raise the next 12 payments by the $1,575. BUT remember, once the last years shortage is paid off your escrow payment for the following year should drop by $800 because the shortage has been paid.
It just sounds confusing, but really isn't.
IF you pay last years shortage of $800 your payment would only go up by the future $800. The amount that your insurance went up.
I sure hope you can understand all of this. I remember when it happened to us and I went --- "Say what?"
Good luck, Kathy G in MI

I hadn't thought of it that way, Kathy. $800 for last year and $800 for the coming year. Ok, that's reasonable. Still high, but...

I bit the bullet and wrote the check. I'm still mad, but what choice do I have. I checked back on the last two years of escrow shortages (the first year we owned the house we got money back, imagine that!) and they were $400 and $300. And this year it jumped to $1575. Argh!

-Jess.

The same thing happened to us! We had the option of writing the check or doubling the monthly escrow. We opted to double the monthly escrow for a few months. The reason is after paying our mortgage on time every month, they said we could take over our own escrow payments. We had to wait until our anniversary date, but it worked out for us. We now pay $350 less every month, our monthly insurance premium increased but it was minimal, and we have two payments a year for taxes which we can manage by putting some aside each month.

Find out if it is an option for you to take over your own escrow. It's nice having the control and NO surprises!

We had a shortfall a few years ago and the escrow amount we were charged went up about twice as much as I thought it would. In our case, we were low, but not in the red. The mortgage company required not only the actual increased amount, but also an additional amount to pad escrow and another additional amount as anticipated increases (based on having a big increase one year). The following year, they cut the increase back to half.

hello, I too have this happening now and have looked into it am finding that this is happening everywhere to lots of people. Seems it borders on fraud as new payments are so high people can;t afford to pay and get foreclosed on but some how there are loop holes for mortgage and escrow companies. Biggest thing i have found is a refund check that is sent by escrow company than a new statement showing shortage! Has scam written all over it! Just another way they are legally able to foreclose on home!? I ahve even been told my company will not send written confirmations concerning conversations I have had with mistakes and shortages, will only give verbal confirmation and add to my computer file so i am sending letters of confirmation of phone conversations return receipt. would like to compile all people who are involved in this shortage scam and return of funds check!

I have the same thing..i really want to know who is responsible for all this mess i have to go through???? my additional taxation was not disclosed to me and no i have a shortage of $3900 or to loose my home! who is responsible, who can we sue???

"my additional taxation was not disclosed to me"

Your county/taxing district doesn't send you an annual property tax bill?

When I get mine I look to see if it has gone up or down, and wait to see what they do to my payment to compensate.
I think I would notice if they under estimated my taxes by over $300/month.

This is the first year I may be happy when I get our tax bills. All of the assessments have dropped, so that taxes should go down.

I have questions. I have a house that for 2 yrs now I have had escrow shortages. Last yr I paid monthly the extr to pay it off. But this yr I am told I have. $2,000 escrow shortage. I changed to a diff ins comp which,was more expensive so I talked,to them and got my insurance cost down by $700 some dollars a yr. When I get my refund back I will apply it to escrow only. But I am just curious,if that will tale,care of my shortage. My mortgage comp said that my cushion is 2 months house note plus 2 months insur cost and that is part,of the,reason for shortage. I just think that cushion is ridiculous. I don' t know what to do. My husband left me and sent me divorce pgs. So I getting the home ready to sell and it only in my name. Any ideas on the,crazy shortage amt and if I make,money when I sell the home is it taxes or do I get to keep it. I have had my home and loved in it for 3 yrs and 3 months. Please let me know. Thanks.

kristyheffren1, it's hard to say if an undefined amount of tax return will reduce a balance that is (unknown amount of mortgage) x 2 plus (unknown amount of insurance costs) x 2. But that's just math.

You really need more help than an Internet forum can offer. Call your lender and telling them what's going on -- especially if your husband's name is on the mortgage. In the house or not, he still is responsible for loans he has signed on to, either individually or with you. Your lender can offer to adjust your mortgage payment, tell you what your options are for the future, etc. They also can provide numbers like current escrow balances, payoff figures, and so on.

We had escrow shortages too because Wells Fargo was paying our property taxes twice in one year. Their mistake but we paid for it. This happened twice.

lucky we were able to pay off the mortgage and get rid of Wells Fargo before they made a bigger mistake

I'm in the same boat U R! $2000 escrow shortage and don't know why! Could a real estate Lawyer help or just $ down the drain? New payment is $200 higher!!

I'm in the same boat U R! $2000 escrow shortage and don't know why! Could a real estate Lawyer help or just $ down the drain? New payment is $200 higher!!

First, a real estate lawyer is probably a great way to turn a $2,000 escrow shortage into a $2,000 escrow shortage and a $450 lawyer bill.

You need to find out why you were short. In the end, escrows are pretty simple and the report should be easy to read. Your escrow account pays for certain things authorized by you in closing. The two most popular things are (1) property taxes and (2) insurance, but some banks will add HOA fees to the list.

You will get a statement from the bank that shows the demands made on the escrow account and the payments into the account. If both of these are correct and there isn't an overpayment, then you owe the higher amount.

As mentioned above, many times the shortage gets doubled in the year following the shortage as they have to make up the shortage from the previous year and prepare for the higher bill the next year.

There are often hiccups in the first few years as timing differences get sorted out. Often the property taxes have weird due dates but these typically stabilize in year 3. After that check your property insurance and tax rate to see if there has been an adjustment.

I thought that the mortage payment was for the insurance,taxes and house payments, why would I need a escrow account if that was the truth?

Randy Gillard it might have been better to start a new thread rather than adding onto one from several years earlier when you start another one.

The escrow account is the one that part of your house payment goes into for insurance and taxes each time there is a payment. It is setup so that buyers do not have to save on their own for large payment for those things and the mortgage company knows that there is funds for those things and that they are being paid.

Mortgage payment = Principal, Interest, Taxes, Insurance (PITI).

- Principal and interest are based on the loan agreement.
- The estimated amount for taxes and insurance are what goes into the escrow account. It is always estimated up front, and adjusted as taxes and insurance go up. Escrow account funds build as you make PITI payments, and then it is "spent" out of the escrow account when tax and insurance payments are due.

For most loans there are regulations that cover how much "cushion" they can maintain for future tax and insurance payments, which prevents them from building up and holding a large amount in your escrow account. This is a link to the federal regulations. https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/17/

It would be a waste of money to hire a lawyer to complain about an escrow account, unless you have actually identified something illegal.

Bruce