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Some Idaho Homeowners May Be Entitled To Refunds

Fri., May 26, 1995

Thousands of Idaho homeowners may be entitled to refunds under new rules governing escrow accounts.

On Wednesday, the U.S. Department of Housing and Urban Development began enforcing rules giving homeowners the right to recover $1.5 billion in overpayments to their accounts.

Escrow accounts are set up by mortgage companies to collect money for property taxes and insurance. The money is collected as part of monthly mortgage payments.

Up to 30 million households nationwide may be entitled to refunds. While the average savings is about $50, there is no formula for calculating the exact amount, experts say.

“The amount will vary according to the size of the loan, how lenders collect escrow money, whether or not they rounded payments and how often they paid taxes,” said Carolyn Jean Stano, assistant vice president of residential real estate at West One Bank in Boise.

Nearly all mortgage lenders in the Coeur d’Alene area sell their loans to be serviced by banks or other funding companies. Many of the biggest lenders who make loans in North Idaho, such as Countrywide Credit tries, have used the new rules for several years.

The new escrow rules also mean homeowners may be eligible for lower monthly payments, new home buyers can save as much as $250 in closing costs, and the amount lenders can require borrowers to deposit in escrow accounts is limited.

Other provisions of the new rules:

Lenders have three years to refund excess payments.

Home sellers must pay six months of uncollected tax payments at closing.

Lenders must set up a new method to account for the money in escrow.

Under the old rules, lenders treated property taxes and mortgage insurance separately. Now they must consider them as one.

Lenders must give borrowers yearly summaries of their escrow accounts. Any surplus of more than $50 must be refunded.

Lenders must pay property taxes every six months. Under the old rules, lenders were allowed to pay once a year.

The new rules were imposed after several lawsuits alleged some lenders were using the escrow accounts to make an unfair profit. The accelerated payment schedule reduces the amount of interest lenders can now earn.



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