Several States’ Laws Say Homeowners Should Earn Interest on Escrow Taxes and Insurance Account Funds

If you own a home and use an escrow taxes and insurance account, you could be eligible to earn interest on the money you have in your escrow account.

According to newly proposed class action lawsuits, several mortgage companies might be in violation of certain state laws by not paying interest on escrow taxes and insurance funds held in the account.

If escrow taxes and insurance money earned interest that the bank kept for itself, the bank could be in violation of the law. You might not be aware you are even owed interest because some banks send periodic account disclosure statements that neglect to show any interest was earned on the escrow taxes and insurance funds.

Such false account statements are intentionally created to make homeowners believe their escrow accounts are being properly managed. In reality, the false disclosure statements enable the banks to profit from the interest the homeowner should receive.

The amount of interest you earn depends upon the bank, but in California, the minimum is two percent interest.

Why Use Escrow Taxes and Insurance Accounts?

If a bank can con a homeowner by illegally taking interest earned in an escrow taxes and insurance account, why have the escrow account?

The escrow account helps most homeowners budget their money so that they pay their annual property taxes and homeowners insurance premium on time. The bank collects 1/12 of the cost of annual property taxes and 1/12 of the cost of the homeowners insurance premium ahead of time and provides payment to the local tax office and to the homeowners insurance company.

Without an escrow taxes and insurance account, a homeowner could miss payments to either taxes and/or insurance. Missed tax payments could result in a lien being placed on the home.

A homeowner who lets homeowners insurance lapse could face a two-pronged repercussion. If an accident occurs on the property when no homeowners insurance is in effect, the homeowner will face out-of-pocket costs and could be sued. If the bank finds out the homeowners insurance policy has lapsed, the bank can force a policy upon the homeowner. Force placed insurance often costs ten times more than the original policy and only covers the home, not its contents.

If you have an escrow taxes and insurance account, your bank is sending the tax payments and insurance premiums on time on your behalf in order to protect their investment – your home. If your mortgage lender has not paid you interest on the escrow funds, you could be eligible to participate in this lawsuit investigation.

To qualify, you mortgage lender or servicer must require that you pay money into the escrow account as a means of pre-paying your property taxes and/or property insurance; your mortgage lender or servicer failed to pay you interest on the escrowed funds; and you must reside in one of the states that requires interest earned on escrow accounts be paid to the homeowner.

Join a Free Mortgage Escrow Account Class Action Lawsuit Investigation

Mortgage borrowers in certain states whose lenders required them to pre-pay their property taxes or property insurance through an escrow account and who did not receive interest on those escrowed funds may qualify to join this mortgage escrow account class action lawsuit investigation.

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