$900/month mortgage payment increase?

Question

I just received a notice from my mortgage company stating that they would be raising my mortgage payment $900 per month beginning in March because of an escrow shortage. The taxes and insurance both went up this year on this property, but that seems like an extreme amount of increase for a monthly payment.

Has anyone encountered this before? And any suggestions for countering this increase?

Thank you!

Has anyone encountered this before? And any suggestions for countering this increase?

Thank you!

Bill B. · Answer

Every escrow change will come with a detailed report of what they expected to pay last year and what they did pay. While $900/mo (almost $11,000) seems excessive< you are catching up for last year and paying next years increase. So your increase is actually $5500/year. That still sounds kind of excessive. But look at the report and you’ll know which one went up and how much.

Could this be the first year with property taxes calculated as a rental instead of as owner occupied? Or the first year after they adjusted the basis because of a higher purchase price? (The adjustment could occur up to 18 months after you purchase and then this adjustment wouldn’t come until a year after that...)

Kevin M. · Answer

@Dave Bopp Also remember Philly just reassessed a ton of home valuations for property tax purposes so you likely have some extra taxes due because of this. I had a Philly property valuation go up by 400% in one year because of reassessment. Check your most recent assessment.

Dave Bopp · Answer

Thanks Account Closed- I've owned this property for a little over two years now and through the first year it was owner occupied Bill so you are likely right about the tax increase for those reasons. My mortgage company never gave me any kind of report regarding the changes though, just a letter of notice stating that they were raising the monthly payment amount. I'll have to ask for this document. I appreciate your insight on this!

Account Closed · Answer

You have to get someone to explain to you what the shortage was.  There should be a website you can log into, or just call and request the escrow statement which shows what the balances were and what was charged to it. Hopefully its a bookkeeping error you can fix, otherwise all you can really do is make sure its legit.

Carl C. · Answer

This is a great reason to pay your taxes yourself and not rely on escrow. We always pay our own taxes and mortgage separately.

Kevin M. · Answer

@Dave Bopp my wife handles appeals for commercial and non-profit properties in Philly and has seen some success. I have not heard of anyone with a successful appeal on the residential side. Hopefully someone can chime in with a story that gives me hope in OPA and the City in general...

Dave Bopp · Answer

@Kevin M.- thats absurd. Do you know anyone in the Philly market who has been successful in an appeal request? It doesn't seem like the city would have any motivation to approve an appeal request

Kevin M. · Answer

@Dave Bopp I've appealed a few times with a ton of evidence as to why the city's valuation is incorrect. I've shown them 5 other properties on my block with larger lots with a lower valuation. Appeals denied. Every time. I ran into the mayor one day and told him about it and he shrugged his shoulders and said "better than it used to be".

Mike H. · Answer

The total tax due each year should be able to be located on the county website or the county in person. So I would look at that. Then add in insurance costs. You should be able to verify that total. Then compare that to what was paid in your escrow online. See if it all totals up. Pretty simple

Dave Bopp · Answer

@Mike H.- the company provided no details in their letter aside from stating a new monthly payment amount and that it was the result of an escrow issue. I had to call to get more information.

@Scott Anderson- I was able to speak with someone yesterday and worked out an extension in the escrow balance amount for 3 years which helped, but the payment is still $400 more per month than my current payment even with the extension.

@Josh C.- the current mortgage is $1,830 per month and the new amount was set to be $2,713. I was able to extend the amount but they still set the payment at $2,250.

@Kevin M.- this property did have a 8% increase in assessed value from 2018 to 2019, but, seems unreasonable to then expect me to pay over $10k more per year as a result. Have you had any lucky appealing any of your tax assessments with the city?

$900/month mortgage payment increase?

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