Following my previous e blast "The Latest Lender Tactics for Denying Loan Mod Requests and Ways to Beat Them"; (click for link) I received an avalanche of correspondence documenting lenders were actually RAISING  monthly house payments " under the guise that the borrower's impound accounts are "short".

This despite the fact that So Cal home values have dramatically decreased in value thus triggering (lower)  tax re-assessments and corresponding cuts in insurance premiums.

These same cuts reduces the monies needed to cover an impound count; thus creating a refund for client by decreasing the amount of money your lender is entitled to hold on to cover the  impound account.

Here is the profile of homeowners that may be entitled to a refund:

a) Reassessed to a lower value by the county tax assessor…

b) Insurance premiums have decreased….

c) Have an impound account thru their lender…..

d) They must notify the lender and provide proof (tax assessor bill and insurance invoices)

Let's use an example of how much money we are discussing. 

Original Home Purchase Price: $600k

Original Monthly Tax Payments: $600 ($7200 annually)

Originally Monthly Insurance Premium $100 ($1200 annually)

Annual "Taxes and Insurance" = $8400

The curent impound account should be $700 (1/12^th) plus an allowable 2 "month cushion"( 2/12'th) = $3360

VS

Current Home Tax Assessed Value: $400k

Current Monthly Tax payments:  $400 ($4800 annually)

Current Monthly Insurance Premium: $75 ($900 annually)

Annual "T and I"= should be $475 (1/12^th) plus an allowable 2 "month cushion" ( 2/12'th) = $2280.

That's a refund of approx $1100. 

Here's the HUD guidelines. (as per the website)

There are two sections of RESPA that deal with servicing related issues.

Under Section 6 of RESPA, it provides borrowers with important consumer protections relating to the servicing of their loans.  

1) Borrowers who have a problem with the servicing of their loan (including impound account questions), should contact their loan servicer in writing, outlining the nature of their complaint.

2) The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint.  

Within 60 days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position.  

3) Until the complaint is resolved, borrowers should continue to make the servicer's required payment.

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6's provisions.

Here's the HUD guidelines. (as per the website)

There are two sections of RESPA that deal with servicing related issues.

Under Section 6 of RESPA, it provides borrowers with important consumer protections relating to the servicing of their loans.  

1) Borrowers who have a problem with the servicing of their loan (including impound account questions), should contact their loan servicer in writing, outlining the nature of their complaint.

2) The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint.  

Within 60 days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position.  

3) Until the complaint is resolved, borrowers should continue to make the servicer's required payment.

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6's provisions.

THIS WON'T BE NECESSARY…WHEN HUD GETS INVOLVED…DISPUTES GET RESOLVED …QUICKLY!!

Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.
Section 10 of RESPA sets limits on the amount that a lender may require a borrower to put into an impound account for purpose of paying taxes, hazard insurance and other charges related to the property.  

During the course of the loan, RESPA prohibits a lender from charging excessive amounts for the impound account.  Each month the lender may require a borrower to pay into the impound account no more than 1/12 of the total of all disbursements payable during the year, plus an amount necessary to pay for any current shortage in the account.

In addition, the lender may require a cushion, not to exceed an amount equal 1/6 of the total disbursements for the year.

The lender must perform an impound account analysis once during the year and notify borrowers of any shortage.  Any excess of $50.00 or more must be returned to the borrower.

If you believe that your lender has not followed RESPA requirements as it relates to your FHA-insured mortgage, you should contact 1-800-CALL FHA for assistance.