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What is 125 rule on property taxes?

Profile picture for Pickly
Thank you guys. He is far in the transaction, I have a question for the expert here. What is 125 rule in property taxes? His LO was saying that the property was assessed and it shows that his property tax  yearly is $300. $25monthly.  Good News, but here is what is confusing him LO said since taxes is too low, the bank has this 125 rule which states that instead of him paying $25 he should pay $125 a month. When he asked his realtor to find out what is going on, his realtor told him the bank is setting up the tax not the county. I told him he should find out at the County Office. I am confuse. I need your professional expertise on this.

Thank you.
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August 12 2009 - Louisville
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Profile picture for Support123
If I understand your situation it sounds as if your lender is violating RESPA Sec. 10 as it applies to the collection of escrow accounts for taxes, insurance, etc. Penalties for violating RESPA are fairly severe so I doubt very much that your lender will want to risk a RESPA violation. If they elect to dispel this as myth feel free to relay their correspondence on the matter to your local HUD office 
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August 12 2009
Profile picture for mikeharrison
Is the property new construction? If so sometimes the last assessment will be on raw so the investor will estimate what the taxes will be on the completed home.
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August 12 2009
 
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DiscussionWhat is 125 rule on property taxes?
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