When you take out a mortgage, lenders want to make sure you have enough money to pay your homeowners insurance and property taxes. One way to do that is to set up an escrow account with just enough money in it to cover these expenses.
But what if your mortgage lender doesn’t use the money as intended? What if, 20 years after opening your mortgage, you find out that it took out $5,100 from your escrow account and paid another homeowner’s property taxes by accident.
Hypothetically, what could you do to rectify the situation and hopefully get your money back?
You have rights as a borrower, and a lender isn’t allowed to use the money in your escrow account for anything other than what was agreed upon.
According to the Federal Reserve, the Real Estate Settlement Procedures Act (RESPA) requires lenders to provide an itemized list of what will be paid with the funds and where the money goes once it’s paid out by the servicer.
If you find out that your mortgage company used the funds in your escrow account incorrectly, it’s a good idea to contact your local tax authority and see what its records show. Getting your paperwork in order is your first priority, as you’ll need documentation to prove your situation.
Then, contact your mortgage lender to find out what happened on its end. The New York State Department of Financial Services says to first file a formal complaint in writing.
In most cases, the lender will respond within 20 business days and resolve the issue within 60 business days. By this time, it’ll either correct the issue — in this case, return the $5,100 back to your account — or provide a statement that covers why it denied your complaint or request.
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If you don’t get the response you hoped for, you can escalate the issue and submit a complaint online with the Consumer Financial Protection Bureau (CFPB).
Like the complaint you submitted to your lender, you’ll need to provide as many details as possible. The CFPB asks that you be clear and concise and include any important dates and amounts the mortgage lender took from you. Don’t forget to provide your contact details and the name of your mortgage lender.
