THE SETUP

We’ve seen Dave’s situation before. The homeowner gets notified that there’s been a change of servicer of his mortgage. He’s notified to send his monthly payment to the new servicer. The payment amount hasn’t changed, so everything appears to be okay. After several months, the homeowner receives notice that his payment is increasing dramatically because his escrow account to cover real estate taxes is short. The problem is the increase in taxes is nowhere close to the increase in payment demanded by the new servicer. Dave smells a fraud.


OUT OF WHACK

A review of the County Auditor’s tax records on Dave’s Property reveals that real estate taxes remained the same for eight and one-half years, followed by a slight increase eighteen months ago and another larger increase six months ago. Altogether, the increases amounted to slightly more than five hundred dollars over the eighteen-month period. On the other hand, the new servicer claimed there was a deficiency in the escrow account of over six thousand dollars. In other words, the tax records showed that Dave underpaid his taxes by five hundred dollars, while the servicer claimed he underpaid by over six thousand dollars. Obviously, the servicer’s numbers are way out of whack.


REVERSING THE SITUATION

We told Dave that there was a way to reverse his situation That would be to write a detailed letter to the new servicer unmasking the disguise that the payment increase is based on a real estate tax increase. We will demand that it provide all records to justify the increase, which clearly will be a challenge for the servicer. We will further demand that Dave’s payment be restored to its former level until the controversy is worked out. If the servicer refuses to cooperate, it could be held liable for all damages caused by its illegal conduct. The lesson for all homeowners hit with a big increase in payment due to an increase in taxes, especially following a change in servicers, is to check the records carefully to make sure that fraud isn’t at play.


Note from the author: If you have questions or comments- regarding this or any Real Estate Story article or should you like more information on any real estate question, please visit www.mcgookeylaw.com, visit us on Facebook, LinkedIn, Twitter and Instagram or call us at 419-502-7223.

Kathryn Eyster contributed to this article