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Profile picture for sanjay92

Escrow question on Refinance

My Lender has screwed me up on Escrow account. When I have asked for quote , I got quote with Escrow account. When I asked him to remove Escrow account, he said he has noted and will remove Escrow account but when my loan is approved and ready for closing, he added 0.25% of Loan amount because of Escrow removal which was never discussed. My LTV is about 77%.
So LOAN officer says that he made a mistake. Now my question is how difficult is to remove Escrow account after it has been setup. I don't want to pay extra 0.25% towards costs.
I have got rate of 3% for Loan of 475K
  • October 21 2013 - US
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Answers (6)

Profile picture for InterFirst Lending
Some  lenders will allow you to remove escrow after making 4-5 payments. In most states, anytime you remove escrow/impounds you are assessed an escrow waiver fee. 
  • October 24 2013
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Profile picture for sanjay92
I have signed all paperwork yesterday so actual closing date is 10/28 I went for Escrow account to save 0.25 %. Based on California impound disclosure waiver doc signed , it says that escrow account is not required by lender and basically it is requested by borrower. I will work on removing may be after some time. Is there any restriction on how soon I can apply for it.
  • October 24 2013
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Profile picture for The Mortgage Mark
Did your loan close?
  • October 24 2013
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As already stated, the .25% hit on pricing for waived escrows is industry standard.  The only lenders you will find that do not have it have essentially priced it into the product mix.  In which case, every client pays for the waiver, whether they have impounds or not.

I have never personally tried to remove escrows after the fact and, it is my understanding that it would be very difficult.  However, years ago I worked with an attorney clients on several transactions and he told me he was always able to get them removed.  We closed the loans with escrows and he had them removed after the fact.  I suspect he used "attorney speak" to accomplish the task, so I am not sure how successful the average lay person would be.

All my best,

Deborah
NMLS #279125
WJ Bradley

"We Listen.  We Care.  We Deliver."
  • October 24 2013
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Profile picture for daveskow
If it "was never discussed"   and if you were provided / signed / returned  the preliminary forms  that  had the  escrow  funds being collected -  then its unlikely this will change ..this would be different if was discussed and then  not  disclosed correctly


the .25% fee you describe is standard for the majority of lenders

good luck
  • October 21 2013
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Just about all lenders charge .25% to remove the escrow account, that is very standard.  

All servicers handle these things differently as far as removing the escrow account, so, you will have to ask the bank you are dealing with how easy/hard it will be.

In my experience, it is not an easy thing to accomplish and some servicers will not remove it.
  • October 21 2013
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