Banks and the Escrow Float

[growing_older]

I think there may be rules that vary by state, but they are certainly also rules that vary by lender. I've had loans that absolutely refused to consider relinquishing escrow to me, and others that have no problem with it (though they reserve the right to see proof of insurance and current taxes). Some lenders use a LTV trigger, but others it's just policy. Some, (as alluded to in other posts) have interest rate or fee differential for allowing you to do your own escrow. You'll likely just need to be aware of what's being offered by various lenders when you shop for a loan. Sometimes you can call customer service and see what options you have, but if you didn't accidentally pick a lender with favorable policies, you may have to shop for one next time you get a loan.

[Texas Proud]

The article from Jazz say it well...

Escrow is to 'protect' the mortgage holder. If the person did not pay the insurance and the house burned down they lose.. if the taxes are not paid and they repo the house.. well, they lose again...

Also remember the vast majority of people we are talking about... they can't save money for ANYTHING... so when it comes to the year end and they have not savings and their CCs are maxed out for Christmas shopping... where is the money coming from

I argued about the fee to be without escrow and they said it was to monitor the property... we send in the insurance rider and they 'check' to see taxes are paid... sounded reasonable at the time...

[FinanceDude]

Originally Posted by Texas Proud

The article from Jazz say it well...

Escrow is to 'protect' the mortgage holder. If the person did not pay the insurance and the house burned down they lose.. if the taxes are not paid and they repo the house.. well, they lose again...

I think companies shoudl take into account the creditworthiness of the client and let that be the guide.

[youbet]

There are several landlords posting here on the board. In other threads, there have been discussions of how they use lease terms to protect themselves from tenants causing damage or not paying, etc. I wonder what their comments are on this subject? If they were lending some of their own money to folks to buy a house, what would their requirements be? Would they require an escrow account for insurance and taxes or at least periodic proof submitted that insurance was in place and taxes being paid?

[calmloki]

Originally Posted by youbet

There are several landlords posting here on the board. In other threads, there have been discussions of how they use lease terms to protect themselves from tenants causing damage or not paying, etc. I wonder what their comments are on this subject? If they were lending some of their own money to folks to buy a house, what would their requirements be? Would they require an escrow account for insurance and taxes or at least periodic proof submitted that insurance was in place and taxes being paid?

On the properties we've funded the borrower pays taxes as a part of their payment, we send a check for the taxes to the loan company when due. Borrower lists us as lien holder on their insurance and the insurance company sends us a declaration page. These are often pretty sketchy loans as far as a bank would see them, so i don't feel guilty about holding the borrower's money for them.