I am seeing reports that bankrupt/closed/vanished mortgage servicers are not making tax/insurance escrow payments.
The escrow money is apparently gone.
Replies
28
Beach Fanatic
Our mortgage company chose not to pay our flood insurance, or paid it to someone else. Our insurance company never asked for the money, they just canceled our policy. The company that holds our second mortgage was the one that contacted us and told us that we need to have flood insurance. When we went back to the other two companies they just pointed fingers at each other and wouldn't fix the problem. So we had to get new flood insurance and wait til next month for it to go into effect. Good thing we live in Driftwood Estates ... we'd be the last place to flood if a storm came through!
Beach Fanatic
Our mortgage company chose not to pay our flood insurance, or paid it to someone else. Our insurance company never asked for the money, they just canceled our policy. The company that holds our second mortgage was the one that contacted us and told us that we need to have flood insurance. When we went back to the other two companies they just pointed fingers at each other and wouldn't fix the problem. So we had to get new flood insurance and wait til next month for it to go into effect. Good thing we live in Driftwood Estates ... we'd be the last place to flood if a storm came through!
Is this a joke
I am guessing there is a little sarcasm here because DE is one of the quickest flooding areas in sowal.Maybe we should add a little head banging smiley for you!
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SoWal Expert
Yes, we need a "heavy sarcasm" emoticon!
How can they take the escrow? Is there another word for that besides embezzling or theft?
How can they take the escrow? Is there another word for that besides embezzling or theft?
Beach Fanatic
Yes, we need a "heavy sarcasm" emoticon!
How can they take the escrow? Is there another word for that besides embezzling or theft?
They stopped funding, declared bankruptcy, fired all the employees and went out of business. Who are you going to call to complain to?
Very scary stuff.
Here's a link you might want to read.
http://www.autodogmatic.com/forum/viewtopic.php?t=1183
Edited
SoWal Expert
Possibly stupid question: Why is the money in escrow? Why can't you just pay them (tax collector etc) directly?
Beach Lover
you can typically pay both insurance & taxes on your own - however, a lender will call this "riskier" b/c they don't have control & consequently will increase your interest rate. it used to be .25% in rate to waive escrows
SoWal Expert
So the people who had NO problem w/ jumbo, 0% down, interest only loans and unverified income statements were picky about how John Q. Middle Class saved for his property taxes?
And now those people they basically forced financially to do escrow had their escrow stolen! Why do I feel lawyers will be making some money soon!
And now those people they basically forced financially to do escrow had their escrow stolen! Why do I feel lawyers will be making some money soon!
Meow
Is this a joke
Maybe we should add a little head banging smiley for you!
I thought the same thing!
It's more like..Escrew!!!
SoWal Insider
I am seeing reports that bankrupt/closed/vanished mortgage servicers are not making tax/insurance escrow payments.
The escrow money is apparently gone.
Where are you hearing this?
The Mortgage Banking Divisions where loans are originated and funded are separate entities from the Servicing Divisions where payments are collected for the Investor whether it be FNMA, Ginnie Mae, etc.
AHM (American Home Mortgage) American Home wants to sell its loan-servicing unit, which collects payments on $57 billion worth of mortgages, at a bankruptcy court auction in early September. (article here)
Another Forbes article here
Right now, everyone is besieging them to give up the loan files that belong to them so they can assume servicing.
I am assuming that until this all gets worked out, they may not be operating the servicing division properly. It's probably a mess over there.
Too bad the people whose quarterly taxes may be due or HO Insurance etc. may have to cough the money up to pay the authorities until this gets worked out, but their money shouldn't be lost.
It will be there for the next quarter or reimbursed back, since the law is you can not over escrow and there is a formula for establishing escrow accounts.
But hail, one can imagine all kinds of possible scenarios.
This YouTube - UFO Haiti should give y'all a laugh. This footage caught August 6th when AHM declared BK.
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Beach Fanatic
I suppose we could get rid of the escrow account if we raised a fuss, but ours is very good about timely payments (always makes sure we get the slight discount for early tax payment too) and will actually let us run a negative account balance if the insurance cost estimates were off for the year.
If anyone's buying a primary residence down here, I really can't say enough good things about Eglin Federal CU's mortgage division- very straightforward to work with, and they hold 99% of the loans they originate.
If anyone's buying a primary residence down here, I really can't say enough good things about Eglin Federal CU's mortgage division- very straightforward to work with, and they hold 99% of the loans they originate.
SoWal Insider
UBS Real Estate Securities Inc. v. New Century Mortgage Corporation, 07-50875, involves claims of breach of contract, conversion and breach of fiduciary duty against New Century, a mortgage lender. UBS is seeking an imposition of a constructive trust, an accounting and a permanent injunction.
In its complaint, UBS explained that it had entered into an agreement with New Century under which the mortgage lender "agreed to collect and deposit into a third-party custodial account borrower mortgage payments for the benefit of UBS, pending the repurchase of the underlying loans" by New Century.
But UBS claims that New Century failed to deposit millions of dollars of mortgage payments that it received from borrowers on loans purchased and owned by UBS, and did not account for missing escrow payments made by borrowers on loans purchased by UBS.
"As such [New Century has] misappropriated UBS's money and escrow money being held for borrowers," UBS said in its complaint.
Representatives of New Century were not available for comment.
In its complaint, UBS explained that it had entered into an agreement with New Century under which the mortgage lender "agreed to collect and deposit into a third-party custodial account borrower mortgage payments for the benefit of UBS, pending the repurchase of the underlying loans" by New Century.
But UBS claims that New Century failed to deposit millions of dollars of mortgage payments that it received from borrowers on loans purchased and owned by UBS, and did not account for missing escrow payments made by borrowers on loans purchased by UBS.
"As such [New Century has] misappropriated UBS's money and escrow money being held for borrowers," UBS said in its complaint.
Representatives of New Century were not available for comment.
SoWal Insider
UBS Real Estate Securities Inc. v. New Century Mortgage Corporation, 07-50875, involves claims of breach of contract, conversion and breach of fiduciary duty against New Century, a mortgage lender. UBS is seeking an imposition of a constructive trust, an accounting and a permanent injunction.
In its complaint, UBS explained that it had entered into an agreement with New Century under which the mortgage lender "agreed to collect and deposit into a third-party custodial account borrower mortgage payments for the benefit of UBS, pending the repurchase of the underlying loans" by New Century.
But UBS claims that New Century failed to deposit millions of dollars of mortgage payments that it received from borrowers on loans purchased and owned by UBS, and did not account for missing escrow payments made by borrowers on loans purchased by UBS.
"As such [New Century has] misappropriated UBS's money and escrow money being held for borrowers," UBS said in its complaint.
Representatives of New Century were not available for comment.
UBS Real Estate Securities Inc. sued New Century Financial Corp. on Thursday, claiming the subprime lender misappropriated millions of dollars from mortgage payments made on loans owned by the investment firm.
In the 14-page filing with the U.S. Bankruptcy Court for the District of Delaware, UBS claims New Century breached the terms of a contract that called for the subprime lender to buy back home loans sold to UBS under certain conditions, such as when borrowers default soon after taking on the loans.
UBS claims New Century and its subsidiaries had agreed to collect borrowers' mortgage payments and deposit them into a third-party account, pending New Century complying with its obligation to buy back some of its loans.
But New Century failed to deposit more than $3.8 million in mortgage payments that the company received from borrowers on loans purchased and owned by UBS, according to the complaint.
**UBS also claims New Century has failed to account for missing escrow payments made by borrowers.
**********************************************
**The last statement is rather vague.
Did this happen on loans that were not yet purchased by UBS in warehouse line or are they just saying, well we asked for New Century to repurchase defaulted loans (which is in every Bankers Master Repurchase Agreement) and they didn't deposit the money, so escrow monies were not deposited, (due to BK) therefore we have no accounting. There's a difference.
In the 14-page filing with the U.S. Bankruptcy Court for the District of Delaware, UBS claims New Century breached the terms of a contract that called for the subprime lender to buy back home loans sold to UBS under certain conditions, such as when borrowers default soon after taking on the loans.
UBS claims New Century and its subsidiaries had agreed to collect borrowers' mortgage payments and deposit them into a third-party account, pending New Century complying with its obligation to buy back some of its loans.
But New Century failed to deposit more than $3.8 million in mortgage payments that the company received from borrowers on loans purchased and owned by UBS, according to the complaint.
**UBS also claims New Century has failed to account for missing escrow payments made by borrowers.
**********************************************
**The last statement is rather vague.
Did this happen on loans that were not yet purchased by UBS in warehouse line or are they just saying, well we asked for New Century to repurchase defaulted loans (which is in every Bankers Master Repurchase Agreement) and they didn't deposit the money, so escrow monies were not deposited, (due to BK) therefore we have no accounting. There's a difference.
Edited
SoWal Insider
**The last statement is rather vague.
Did this happen on loans that were not yet purchased by UBS in warehouse line or are they just saying, well we asked for New Century to repurchase defaulted loans (which is in every Bankers Master Repurchase Agreement) and they didn't deposit the money, so escrow monies were not deposited, (due to BK) therefore we have no accounting. There's a difference.
Here's my take on the scenario:
In its complaint, UBS explained that it had entered into an agreement with New Century under which the mortgage lender "agreed to collect and deposit into a third-party custodial account borrower mortgage payments for the benefit of UBS, pending the repurchase of the underlying loans" by New Century.
UBS had already bought the toxic loans from New Century and was in the process of having them REPURCHASE the loans.
But UBS claims that New Century failed to deposit millions of dollars of mortgage payments that it received from borrowers on loans purchased and owned by UBS, and did not account for missing escrow payments made by borrowers on loans purchased by UBS.
New Century was servicing the toxic UBS-owned loans while they were making arrangements to buy them back. New Century was supposed to "collect and deposit into a third-party custodial account" the principle/interest/escrow payments received from the borrowers of the UBS-owned loans--but they allegedly kept the money instead.
$3.8 million owed to UBS + the borrowers escrow payments are now MIA.
I'm sure UBS has a valid case against New Century. When it comes down to believing the accusations of one of the world's financial giants or those of some sleazy, bankrupt subprime lender....I'll go with UBS.
.
.
Edited
SoWal Insider
Here's my take on the scenario:
UBS had already bought the toxic loans from New Century and was in the process of having them REPURCHASE the loans.
New Century was servicing the toxic UBS-owned loans while they were making arrangements to buy them back. New Century was supposed to "collect and deposit into a third-party custodial account" the principle/interest/escrow payments received from the borrowers of the UBS-owned loans--but they allegedly kept the money instead.
$3.8 million owed to UBS + the borrowers escrow payments are now MIA.
I'm sure UBS has a valid case against New Century. When it comes down to believing the accusations of one of the world's financial giants or those of some sleazy, bankrupt subprime lender....I'll go with UBS.
.
Whose alledging that? Are you saying that you think they deposited the monies into their New century accounts to fund operations prior to BKtcy?
Sleazy mortgage Banker, I won't dispute that, but how stoopid of a move for UBS. You own loans in default originated with a subprime mortgage banker, and you hand them back to collect payments and pay out escrows when you haven't gotten paid back on the defaulted loans?
I am not sure if New Century had an actual loan servicing division or not, but most subprime lenders usually did not (in the old days anyway, and most subprime mortgages weren't even reported on credit reports) but if they didn't have a servicing division, even more ridiculous for UBS to hand off servicing on loans that have not been repurchased yet, especially when a banker may not have the capacity with software, etc. to wire escrow payments.
Edited
Beach FanaticAuthor
"....even more ridiculous for UBS to hand off servicing on loans that have not been repurchased yet, especially when a banker may not have the capacity with software, etc. to wire escrow payments...."
Regardless, all this "should have been" does little to console those
who have paid into escrow and now discover that they must
pay their taxes and insurance a second time, even if only
temporaily.
Especially considering the insurance and tax rates in Florida.
Yet another reason one should maintain a high level of
"personal liquidity,"
i.e. keep plenty of cash on hand.
Regardless, all this "should have been" does little to console those
who have paid into escrow and now discover that they must
pay their taxes and insurance a second time, even if only
temporaily.
Especially considering the insurance and tax rates in Florida.
Yet another reason one should maintain a high level of
"personal liquidity,"
i.e. keep plenty of cash on hand.
SoWal Insider
"....even more ridiculous for UBS to hand off servicing on loans that have not been repurchased yet, especially when a banker may not have the capacity with software, etc. to wire escrow payments...."
Regardless, all this "should have been" does little to console those
who have paid into escrow and now discover that they must
pay their taxes and insurance a second time, even if only
temporaily.
Especially considering the insurance and tax rates in Florida.
Yet another reason one should maintain a high level of
"personal liquidity,"
i.e. keep plenty of cash on hand.
For starters, Shelly is aledging that New century cashed the checks elsewhere and didn't deposit them. if UBS asked fror a buyback of defaulted loans, meaning borrowers had not made payments, I am confused as to where these people put in any money in escrows to start with.
What I am thinking is UBS came back to New century and said buy these back, and new century simply didn't have sufficient liquidity to do so since their warehouse lenders terminated relations, due to all the defaults that may result in foreclosure. So possibly New Century just decided to default on their Master Agreement which means they didn't accept payments on loans that were late on payments in lieu and just went Bk instead. In UBS lawsuit, they are suing because of that and included escrow payments in the bidy of the law suit not being accounted for since payments were not accpeted. That is how I am reading this.
if someone can provide an article or substantiate allegations that New Century actually cashed the money in another account, please provide.
By now, this should be common knowledge.
My fear with posting vague information is scaring the bejeebers out of people that escrow money is just disppearing, and people who are required to escrow just start mailing in principe and interest payments. If you are required to escrow, and do not want to anymore, you can request permission to have escrow removed and remit direct to taxing authorities. Whether it's allowed depends on LTV and State laws.
I know in New York it's illegal to require escrow if LTV is 80% or below and you can not be charged either at closing or post closing for escrow waivers.
However, your payments could be reported late if you are required and take it upon themselves to do it due to mass fear.
Edited
Beach Fanatic
you can typically pay both insurance & taxes on your own - however, a lender will call this "riskier" b/c they don't have control & consequently will increase your interest rate. it used to be .25% in rate to waive escrows
This is untrue, at least in my experience. I have never seen an interest rate increased due to a borrower waiving escrow.
Conforming lenders require escrows at any loan to value over 80%. At loan to value of 80% or less, the borrow has the option to waive escrows for a FEE of .0025 of the loan amount. Loan of 100k = $250 to waive escrows.
Subprime lenders typically give the borrower a choice and do not charge any fees to waive because they are making up for the risk in their interest rate already. There are no pricing adjustments based on the borrower's choice.
There may be exceptions out there but this has been the case in 100% of the loans I have seen.
SoWal Insider
For starters, Shelly is aledging that New century cashed the checks elsewhere and didn't deposit them.
UBS is alleging New Century didn't deposit the checks.
I am not sure if New Century had an actual loan servicing division or not, but most subprime lenders usually did not (in the old days anyway, and most subprime mortgages weren't even reported on credit reports) but if they didn't have a servicing division, even more ridiculous for UBS to hand off servicing on loans that have not been repurchased yet, especially when a banker may not have the capacity with software, etc. to wire escrow payments.
New Century was in the loan-servicing business until they sold it off after filing bankruptcy. Some of the Sub-primates serviced their toxic loans after they handed them off allowing them to continue feeding at the trough.
My fear with posting vague information is scaring the bejeebers out of people that escrow money is just disppearing, and people who are required to escrow just start mailing in principe and interest payments.
I would recommend anyone who has the opportunity should always take responsibility for mailing in their own insurance and tax payments--after all, who is on the receiving end of the risk for non-payment?
I hope folks do get the "bejeebers" scared out of them--maybe it will cause them to drag out their mortgage papers and read all that fine print they didn't read at the closing table so they know where they now stand and take more care when they sign on the dotted line the next time. Forewarned is forearmed.
.
Edited
Beach FanaticAuthor
"...My fear with posting vague information is scaring the bejeebers out of people that escrow money is just disppearing, and people who are required to escrow just start mailing in principe and interest payments..."
Yes, no one should worry about monies kept in "escrow:"
Escrow money is always safe.
http://stlouis.fbi.gov/dojpressrel/pressre06/mortgagefraud012606.htm
http://stlouis.fbi.gov/dojpressrel/pressre06/embezzlement030906.htm
http://stlouis.fbi.gov/dojpressrel/pressre06/mortgagefraudscheme030906.htm
(just in one local area)
Yes, no one should worry about monies kept in "escrow:"
Escrow money is always safe.
http://stlouis.fbi.gov/dojpressrel/pressre06/mortgagefraud012606.htm
http://stlouis.fbi.gov/dojpressrel/pressre06/embezzlement030906.htm
http://stlouis.fbi.gov/dojpressrel/pressre06/mortgagefraudscheme030906.htm
(just in one local area)
SoWal Insider
Here's my take on the scenario:
New Century was servicing the toxic UBS-owned loans while they were making arrangements to buy them back. New Century was supposed to "collect and deposit into a third-party custodial account" the principle/interest/escrow payments received from the borrowers of the UBS-owned loans--but they allegedly kept the money instead.
$3.8 million owed to UBS + the borrowers escrow payments are now MIA.
.
Shelly, not to be argumentative, but here is what you said above. You offered your take on the situation. I asked for proof that mortgage escrow monies are missing from defaulted borrowers and/ or serviced borrowers.
UBS is alleging New Century didn't deposit the checks.
New Century was in the loan-servicing business until they sold it off after filing bankruptcy. Some of the Sub-primates serviced their toxic loans after they handed them off allowing them to continue feeding at the trough.
I would recommend anyone who has the opportunity should always take responsibility for mailing in their own insurance and tax payments--after all, who is on the receiving end of the risk for non-payment?
I hope folks do get the "bejeebers" scared out of them--maybe it will cause them to drag out their mortgage papers and read all that fine print they didn't read at the closing table so they know where they now stand and take more care when they sign on the dotted line the next time. Forewarned is forearmed.
.
Yes, people shoudl always know what they are signing, but there are many, many people who preferred to escrow taxes and insurance even though given the choice at no cost to waive it. Why because it is easier, and some people were afraid they would not budget properly when the next tax payments were due. Errors have been made by the largest most secure Banks, and yes, it's ultimately your responsibility to get the payment in, but I have never in 2o yrs. in the business heard of someone's money in escrow with a mortgage service just evaporating.
"...My fear with posting vague information is scaring the bejeebers out of people that escrow money is just disppearing, and people who are required to escrow just start mailing in principe and interest payments..."
Yes, no one should worry about monies kept in "escrow:"
Escrow money is always safe.
http://stlouis.fbi.gov/dojpressrel/pressre06/mortgagefraud012606.htm
http://stlouis.fbi.gov/dojpressrel/pressre06/embezzlement030906.htm
http://stlouis.fbi.gov/dojpressrel/pressre06/mortgagefraudscheme030906.htm
(just in one local area)
Capricious, I have seen title agents and lawyers hopping a plane out of the country who stole escrow monies.
Which is why there is insurance by the title companies who the abstracters/ agents put their deals through.
Same for lawyers with malpractice insurance.
Neither you or Shelly have shown me evidence that a mortgage servicer stole escrow monies yet.
Beach FanaticAuthor
"...Neither you or Shelly have shown me evidence that a mortgage servicer stole escrow monies yet...."
I did not say it was "stole"
I said it was "apparently gone."
Even if it is only temporarily "gone," will the
tax collector and the property insurance
company wait on it to reappear?
What to do if your "mortage company" is in dire
straits? Keep an eye on your escrow totals and keep
enough cash on hand to make the tax and insurance
payments if it becomes necessary.
Excuse me if I find little reason to trust the "predatory lenders."
I did not say it was "stole"
I said it was "apparently gone."
Even if it is only temporarily "gone," will the
tax collector and the property insurance
company wait on it to reappear?
What to do if your "mortage company" is in dire
straits? Keep an eye on your escrow totals and keep
enough cash on hand to make the tax and insurance
payments if it becomes necessary.
Excuse me if I find little reason to trust the "predatory lenders."
SoWal Expert
There are reports from various sources that escrow money has not been paid to the tax collector or insurance companies like it was supposed to be. People only found out because for some reason the tax man still wanted $$.
Beach Fanatic
Maybe the escrow monies are somewhere like the social security lunchbox. I mean lockbox. Lunchbox would imply that what's inside could be eaten.
SoWal Insider
Neither do I Capricious trust subprimates/predatory mortgage Lenders, which is why I didn't sell subprimes loans, didn't give my business to title agents, but insurers directly, hail I didn't even do business with some Banks if their servicing dept was not up to my standards, but I feel that when someone posts something, and it's vague in respect to information, especially a subject that confuses people not in the industry, we have a responsibility more than just saying " money is gone". That can mean anything.
Then you post and get defensive when you used the word "escrow", (title of your thread) which it's context relative to this thread you mean collection of PITI (servicing) and post links to title agents who embezzled money, which is totally irrelevant, because I said that I never saw an escrow evaporate. (from a mortgage servicer)
In further discussion, I will use the word servicer or PITI (Principal, Interest Taxes and Insurance)
It may surprise you, but in the 20 yrs. in this business, I have worked for a major title insurer, so I have seen hundreds of those types of cases.
You weren't showing me anything new.
I don't profess to know everything in this business, and I am always open to learning more or something new, but if someone tells me "money is gone" I am going to request they be more explicit.
Hardly a lot to ask.
Beach FanaticAuthor
"...Then you post and get defensive when you used the word "escrow"..."
Pardon, but I was not getting "defensive" in the least.
Just pointing out that you were misrepresenting what I wrote.
As to defensive, YOU are the one who keeps pointing out that
you did not "do" sub prime loans.
YOU are the one who claims to never have used title agents.
YOU claim not to have done business with banks that "did not meet your standards."
My friend, you are the one who seems to be "defensive."
I merely posted that I heard there were problems with escrow monies
YOU are the one who then got defensive and began posting long rambling rebutles.
But have a happy day regardless.
Pardon, but I was not getting "defensive" in the least.
Just pointing out that you were misrepresenting what I wrote.
As to defensive, YOU are the one who keeps pointing out that
you did not "do" sub prime loans.
YOU are the one who claims to never have used title agents.
YOU claim not to have done business with banks that "did not meet your standards."
My friend, you are the one who seems to be "defensive."
I merely posted that I heard there were problems with escrow monies
YOU are the one who then got defensive and began posting long rambling rebutles.
But have a happy day regardless.
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