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#2214651 - 05/30/19 10:57 PM Taxes Paid through Escrow then County Refunds
LostinRegLand Offline
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Joined: Jun 2014
Posts: 118
WA
I was just brought a scenario for consideration.

We pay a loan customers property taxes through escrow. The loan customer applies for a senior discount and is granted the discount. The county applies the discount to the last three years. The refund for that time period is sent to the bank. I told our Servicing Department that the money is the customers and should not be put back into the escrow account. I could not find anything to support us placing the refund in the escrow account but our servicing department informed me that this is how they always handle refunds for taxes and are balking a little at my decision.

Thoughts on this practice.

I feel that once we pay it out of the escrow account and it is accepted by the payee if there is a refund at a later time we as the bank have no authority to make the decision to place it back into their escrow account. My servicing department argues that the customer will eventually end up with at least most of the refund during reserve analysis, either a short year statement at the time or during normal analysis.

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#2214653 - 05/30/19 11:18 PM Re: Taxes Paid through Escrow then County Refunds LostinRegLand
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Who is the check made payable to? The customer or the bank?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2214654 - 05/30/19 11:25 PM Re: Taxes Paid through Escrow then County Refunds LostinRegLand
LostinRegLand Offline
100 Club
Joined: Jun 2014
Posts: 118
WA
The check was made payable to the bank.

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#2214659 - 05/31/19 11:41 AM Re: Taxes Paid through Escrow then County Refunds LostinRegLand
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Then I would deposit the money back to the escrow account and immediately perform a short year analysis using the new lower property tax figure and send the overage to the customer. That is going to what, take an additional week at the most? The customer is likely to get more back than just the county refund.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2214744 - 06/02/19 07:07 PM Re: Taxes Paid through Escrow then County Refunds LostinRegLand
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
The escrow account is a fiduciary account of the customer but it belongs to the bank. The refund belongs to the customer but is made out to the bank. The best way to handle the refund is to put it in the escrow account, as Ready said.

You could do a short year statement, as Randy said, but you're not required to. You could wait until the normal annual analysis and they will be obviously be a surplus. That's the only time you are required to get the refund to the customer.
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