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#2052367 - 12/03/15 07:59 PM Insurance Premium Increases
wblewis935 Offline
Member
Joined: Feb 2011
Posts: 53
We just received a bill for an increase in insurance premium for a customer whose insurance and taxes are escrowed. We have already made the distribution for the original premium. I was wondering if anyone could guide me a little on whether or not we have to pay the increase and let the escrow go negative and recover that in the next analysis, OR can the customer opt to pay the premium out of pocket to avoid an escrow increase next year?

We have never had this happen before and I can't find any guidance for it. Any help would be great!
Thanks!

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Escrows on Higher-Priced Mortgages
#2052374 - 12/03/15 08:19 PM Re: Insurance Premium Increases wblewis935
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,339
Galveston, TX
How did you pay an insurance bill without the knowing the billed amount??

They could voluntarily pay it or you have to pay it and you could do a short year analysis to not give them a payment shock next year.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2052382 - 12/03/15 08:27 PM Re: Insurance Premium Increases wblewis935
wblewis935 Offline
Member
Joined: Feb 2011
Posts: 53
We paid the insurance based on what the company had quoted. Then, the customer remodeled the home and added on to it. This increased their insurance premium by nearly double. If they are allowed to voluntarily pay for it without having to do anything to the escrow (and they are willing...) then that would certainly be the best course of action for everyone involved.

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#2052384 - 12/03/15 08:28 PM Re: Insurance Premium Increases wblewis935
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,339
Galveston, TX
Not necessarily. Come the next analysis date they are still going to have a significant shortage in their escrow account for next year. I would do a short year analysis now anyway.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2052480 - 12/04/15 02:58 PM Re: Insurance Premium Increases wblewis935
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,768
Bloomington, IN
FWIW I agree with Randy. It's better to adjust the payments now than to let the borrower have a payment shock at the next annual analysis.
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The opinions expressed are mine and they are not to be taken as legal advice.

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