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Profile picture for onetwo34

Any risks to an impound account with GMAC? They want to collect 6 months of property taxes up front

Then i need to pay monthly with my mortgage.  The rate is good (5.25%) for a 625K loan but the impound amount will hold 6-12 months of property tax (8 to 16K) at any given time.  I have at > 30% equity in the house and excellent credit.  What if the bankrupt company doesn't pay my property tax?  We signed docs yesterday but I'm losing sleep over this?   If I rescind, what is the obligation of escrow regarding my payment?
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June 04 2009 - US
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Profile picture for LolKitty
Hey there,

Can you let me know what happens when you try to cancel your impound account with GMAC? I'd like to understand how much of a PITA this process will be.

I just discovered the same - that the impound holds far too much of my own money that I care for to sit in non-interest earning limbo. Furthermore, a little research has revealed that because loans change hands frequently between mortgage companies, there is a risk that, if the transaction occurs around tax time, your taxes won't be paid, and you are still liable, not the new company that manages your impound account.

Just the hours of frustration and headache a scenario like that will entail is enough for me to pay the cancellation fee.
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June 20 2009
If you signed yesterday removing the escrows will be an issue without resigning a bunch of crap. The risk of the loan changes slightly but your settlement statement and cash back to you will change, its only a paper work shuffle but it wouldnt be more than a little hassle. Also, if you owe only 70% on your house you probably wont be charged the up front fee of .25% to waive escrows. It varies lender to lender. If you have the financial discipline to save and prepare for your yearly tax cost it is always better to hold your own money in your own accounts and give it to the tax guy when its time. Why would you want some company to hang on to 16k of your money for your? However, if you will spend it, (like I would) then it might be best to stick with escrows. As far as Gmac going insolvent and robbing your escrow account....I would say that is a very narrow chance. Not impossible though, it has happened with smaller companies before. ESCROW ACCOUNT=GENERAL FUND......this is highly illegal though. Good luck
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June 05 2009
If you have "> 30% equity in the house" you don't have to escrow your taxes and insurance. Just tell them you don't wish to do that and at most there will be a one time charge of at maximum, $1562.50 (.25%) based on your loan amount. There may be no charge at all based on their policy and the state you are in.

I also can't help but notice your loan amount is for the old conforming limit of $625,000. Are you aware that the current loan limits may support up to a $729,750 loan amount depending on where you are? If you are paying your mortgage down to get to $625k you may benefit from the higher limit. Ask your GMAC loan officer about this.
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June 04 2009
GMAC is not bankrupt. General Motors is bankrupt.

http://www.marketwatch.com/story/gmac-will-continue-to-provide-financing
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June 04 2009
 
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