When you pay the mortgage on your home, the money goes to a loan servicer. That loan services is supposed to handle the taxes on your mortgage. Usually, things go smoothly. However, mistakes do happen. Here’s what to do if your mortgage company forgot to settle taxes.
How Do Taxes Work Through Mortgage Company?
In case you aren’t entirely sure how this should all work, here’s a quick refresher:
- You take out a home mortgage.
- Each month, you make a mortgage payment. This covers the loan principle as well as the interest due each month.
- Sometimes, the loan services sets up an escrow account to pay your taxes, homeowner association fees, etc. If this is the case, then your monthly payment also pays that month’s bills.
- The loan services uses that money to handle the taxes for you.
So, to clarify, you are responsible for making your monthly payment to the loan servicer. The services, in turn, is responsible for making monthly payments such as taxes, HOA fees, etc.
You And Your Loan Services Must Make Timely Payments
You are responsible for making on-time payments to your lender. Your lender is responsible for making timely escrow payments including for your taxes. Federal law requires them to do so. Generally speaking, they are required to pay your taxes, insurance, HOA fees, and any other agreed-upon escrow fees on or before their due date each month.
As long as you’ve made your on-time payments to them, they have to make on-time payments for your taxes. In fact, as long as your account isn’t 30+ days overdue, they must still make those on-time payments. So, even if you made your mortgage payment ten days late this month, they were still legally obligated to pay your insurance and taxes on time for the month.
What If Mortgage Company Forgot To Settle Taxes?
So, now we’re clear. As long as you’re making your on-time mortgage payments, they have to pay your taxes as established in the escrow account agreement. What if they don’t? What if the mortgage company forgot to settle taxes as they were supposed to? Lawyers.com suggests that you immediately take the following steps:
- Call the mortgage company and ask them to immediately resolve the issue.
- Send the mortgage company a notice of error outlining the problem. They legally must let you know that they received it within five business days of receipt. Moreover, they must correct the problem within 30 business days. Additionally, they must cover any late payment fees.
- Contact the tax company to apprise them of the issue. Let them know the mortgage company forgot to settle taxes. Tell them the steps that you’ve taken to resolve the issue.
- If the problem isn’t resolved within the time frame, then you should take further action. You can file a complaint with the Consumer Financial Protection Bureau who will contact the servicer directly. If necessary, you can also speak to an attorney.
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Kathryn Vercillo is a professional writer with more than a decade of experience writing about healthy living and personal finance. She lives in San Francisco, where she has learned to maximize frugal living tips in order to thrive as a freelancer in one of the nation’s most expensive cities. When she’s not writing, she’s exploring the city on foot with her rescue dog. Learn more about her at www.kathrynvercillo.com. Kathryn also writes about saving money with coupons over at GroceryCouponGuide.com .