Can You Challenge an Unexpected Increase in Mortgage Payments After an Escrow Review?
You open the mail, and your mortgage payment jumped by $200. Nothing changed with your loan, so what happened? Your escrow review probably did. As attorneys in Upper Marlboro, Maryland, we see this often, and we have walked homeowners through it many times. Some increases are fair, while others deserve a closer look. Let’s break it down in plain steps so you can check your own numbers.
Why Did My Mortgage Payment Go Up After an Escrow Review?
Your mortgage payment often has two parts. One part pays down your loan. The other goes into an escrow account for property taxes and homeowners insurance. Your servicer pays those bills for you when they come due. Once a year, your servicer reviews the account. They compare what they collected with what they paid. Then they estimate next year’s bills.
If taxes or insurance went up, your monthly payment goes up too. A shortage can add even more. This happens when the account held less money than the servicer needed. Federal rules also let servicers keep a small cushion, up to about two months of bills.
So, Can You Challenge the Increase?
Yes, you can, but it helps to know what is fair game. Your servicer does not set your tax bill or your insurance premium. Those costs come from the county and your insurer. In our experience, the best challenges focus on mistakes or on the bills themselves.
Here are common problems worth checking:
- Math or data errors: Servicers use software, and typos happen. One wrong tax figure can inflate your whole payment.
- Old bills: Your servicer may still use last year’s tax amount after you won an appeal.
- An oversized cushion: Federal rules cap the cushion, so ask to see the numbers behind it.
- Missing credits: A payment you made may not show up in your account history.
- A tax bill you can fight: If your home is overvalued, you can appeal it. Lower taxes mean a lower escrow payment.
Step-by-Step: How to Challenge an Escrow Increase
Step 1: Read Your Escrow Statement Slowly
Your annual escrow statement lists the bills paid, the bills expected, and any shortage. Grab your latest tax bill and insurance bill. Then compare the numbers line by line. Circle anything that looks off.
Step 2: Ask for Your Escrow Account History
Call your servicer and ask for a full account history. Then follow up in writing so you have a record. This history shows every deposit and payment. It often reveals where the numbers went wrong.
Step 3: Send a Written Notice of Error
If you spot a mistake, put it in a letter. Name the error, explain why it is wrong, and attach proof. Send it by certified mail and keep copies. Under federal mortgage servicing rules, your servicer must confirm receipt within five business days. It then has about 30 business days to respond, with a possible 15-day extension. If the letter feels confusing, an attorney in Temple Hills, MD, can help you shape it.
Step 4: Appeal Your Property Tax Assessment
Higher taxes often drive escrow jumps. In Maryland, the State Department of Assessments and Taxation reviews home values every three years. If your value looks too high, you can appeal. The deadline is 45 days from the date on your assessment notice, so act fast.
Gather recent sales of similar homes nearby to support your case. Also check whether you applied for the Homestead Tax Credit, which limits yearly increases in taxable value. If you win, send the new bill to your servicer so it can adjust your payment.
Step 5: Shop for Better Homeowners Insurance
Insurance costs have climbed across the country. Get quotes from at least three companies. Ask about bundling, safety discounts, and a higher deductible, but pick one you can afford if a claim happens.
Send your new policy to your servicer right away. Never let coverage lapse, because your lender may buy costly coverage for you.
What to Do If You Have an Escrow Shortage
A shortage feels like a bill from nowhere. It is not a penalty, though. It simply means the account came up short. Ask your servicer how they plan to collect it. Federal rules limit how fast a servicer can demand repayment, so you often get time to spread it out. Ask for the longest plan available. Then ask again after any appeal, since lower taxes may shrink the gap.
When a Higher Payment Becomes a Bigger Problem
Sometimes even a fair increase strains the budget. If you start falling behind, act early. Late fees pile up fast, and missed payments can lead to foreclosure.
A foreclosure attorney in Hyattsville, MD, can review your loan, explain your choices, and speak with your servicer for you. Options may include a repayment plan, a loan modification, or bankruptcy relief such as Chapter 13, which can help some homeowners catch up over time. The sooner you ask for help, the more choices you tend to have.
How to Keep Your Escrow Payment Steadier Next Year
A few simple habits can prevent another surprise. Review your tax bill each fall. Compare insurance quotes before every renewal. Save every escrow statement so you can spot changes quickly. This guide shares general information, not legal advice for your situation.
FAQs
Can my mortgage company raise my payment without warning?
Servicers must send an annual escrow statement that explains any change. Review it right away. If you did not receive one, ask your servicer for a copy and the date it was sent.
Can I remove escrow from my mortgage?
Sometimes. Some conventional lenders allow it if you have enough home equity and a solid payment history. FHA loans usually require escrow. Check your loan terms or ask your servicer.
How often does a lender review my escrow account?
Lenders must review it at least once a year. They may also check it sooner if your taxes or insurance change a lot. Keep your statements so you can compare each year.
Will paying a shortage in one lump sum lower my payment?
It can. Paying up front removes the monthly shortage add-on. Your base escrow payment may still rise if taxes or insurance went up. Ask your servicer for both amounts.
Does my lender have to refund extra escrow money?
Often, yes. If the surplus is $50 or more and you are current on payments, the servicer must refund it within 30 days. Smaller amounts may be credited instead.
Talk With Us About Your Escrow Increase
If your new payment does not add up, we would love to take a look with you. At Joy Robinson Law, we help homeowners read escrow statements, spot errors, and plan their next steps. We also guide families facing foreclosure or heavy mortgage debt through their bankruptcy options. As attorneys in Bowie, MD, we stand with homeowners across nearby communities, too. Reach out today, and let’s work out a plan that fits your budget.