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CalAttorney2, Lawyer
Category: Real Estate Law
Satisfied Customers: 10244
Experience:  I am a civil litigation attorney with experience representing HOAs, homeowners, businesses and others in real estate matters.
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My wife and I refinanced our mortgage though US Bank in

Customer Question

My wife and I refinanced our mortgage though US Bank in February 2016. The closing terms were for a conventional 20 year mortgage with no PMI. Our rate 3.99% on $325,000 with a $1969.20/month payment that included $433.89/month for escrow to pay property taxes and homeowners insurance. We found out in during the second week of May through a delinquent tax notice from the city/county that property taxes had not been paid and that $4547.80 was due. This notice threatened to sell our taxes at a tax lien sale in November, 2016 if not paid by May 31,2016.
- I immediately called the city and US Bank.
o We can obtain our phone records if need be. Can phone recordings be obtained from US Bank?
- Upon review of our mortgage contract, US Bank admitted the mistake of not creating an escrow account for us to pay the taxes as stated in our loan documents.
o Can provide our copies of loan documents & letters.
- The terms on our loan documents state that our monthly payment of $1969.20 would include amounts for escrow withholding for payment of property taxes and homeowners insurance.
- We were promised prompt resolution of this issue and a follow up phone call and formal letter of confirmation. We never receive either.
- Approximately two weeks later, upon checking our online bank accounts I noticed that an escrow account was active. However, it appeared that only half of the delinquent taxes had been paid.
- I again called the city/county who confirmed that only half of the amount was paid and that this would not prevent our taxes from being sold at a tax lien sale.
- I contacted US Bank again to inform them that the total bill must be paid to prevent our taxes being sold at a tax lien sale. They said they would “look into it” and would promptly return a phone call to give me an update. I never received any confirmation.
- I checked the accounts daily and saw that the total amount had been paid the following week. I followed up with the city to confirm that everything was in order, and it was. After a very stressful 2 weeks, we were able to relax about this issue.
- Today 6/21, we received a letter from US Bank informing us that as a result of all these errors, our monthly payment beginning in September of 2016 is now going to be $2853.49. This is an increase of $884.29 per month. This amount would cover the amount paid for delinquent taxes and would be prorated for 12 months ($378.98/month), after which our new payment would be $2474.51 to adjust for escrow, which should have already been included in the original $1969.20 monthly payment.
- The reason we are seeking legal advice is because US Bank seems to be trying to make drastic changes to the terms of our mortgage contract to make us pay for the mistake they made. This cannot be legal. I don’t expect anyone else to pay our taxes for us, but at this point we feel so bullied, that I don’t know how far we should go with this.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

If the loan documents state that the loan terms include payment of your property taxes, then the bank is going to be responsible for their error (they must pay for this expense, not you).

However, you need to meet with one of these local attorneys you have contacted to go over the details of your own specific loan document to see exactly what is in there (I am guessing that based on what we see in the majority of loan documents along with the requirements of the "Truth in Lending Act" that the bank is not going to be permitted to change your monthly amount due to correct for their error, but I would want a local attorney to confirm this).

You are looking at a 20 years worth of payments at nearly $900 per month (or ballparked $190,000 in dispute), so this is worth retaining a lawyer over.

I cannot promise that the dispute is going to resolve in your favor, but I do believe that there is at least a good argument that the bank is going to be bound by the stated terms of the monthly payment as identified in the loan agreement.

(I understand this situation is terribly stressful, but the dispute here is going to be focused on the contract claims - the lender failed to pay your property taxes as they agreed to and they made what we refer to as a "unilateral" mistake - so they are going to have to bear the burden of correcting that mistake).