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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Consumer Protection Law
Satisfied Customers: 19625
Experience:  B.A.; M.B.A.; J.D.
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I’m refi-ing with Chase, my current mortgager, in New York

Customer Question

I’m refi-ing with Chase, my current mortgager, in New York State. They sent a breakdown of the payoff amount on my current mortgage. In that breakdown, they show that they are taking $2,736 from my current escrow account (for taxes and insurance) and subtracting it from the principal, In other words, they are using my $2,736 in escrow to reduce the payoff amount. How can they do that? Isn’t the $2,736 in essence my money. It’s only there to pay taxes and insurance, not to use as their personal stash.
After all, by doing that, they are, in effect, increasing the amount of the closing costs, and, by the way, increasing them above what they say is the legal limit. The closing costs disclosure already shows money to establish the new escrow (for the new loan).
I can’t imagine how they could justify that. To me, it looks like a shell game: a sleight of hand, slipping my $2,736 in their pocket.
Submitted: 1 year ago.
Category: Consumer Protection Law
Expert:  Phillips Esq. replied 1 year ago.

Hello: This is Attorney Phillips. Welcome to JustAnswer. I am reviewing your post, and I will post my response very shortly.

Expert:  Phillips Esq. replied 1 year ago.

Yes, eventhough the amount in escrow is your money, the lender using it to reduce the the principal is still for your benefit. The money is still being used on your behalf. The lender cannot return the escrow to you when there is a balance in your account. Any balance in the escrow will go towards pay-off--to pay down the total amount due. So, the lender's action here is legal.

I am sorry that I do not have better news for you.

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