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Customer Refuses to Pay Escrow

Question: 
We have a customer who is refusing to pay the increase in her taxes which has made her escrow negative. We have asked her several times to catch up, giving her several opportunities. We would now like her to pay her own escrow. Because of her refusal to catch up, are we allowed to discontinue paying her escrow for her? I have looked in the Consumer Compliance Manual and have not noticed anything about discontinuing the escrow payments.
Answer: 

Answer by Dan Persfull:Look to your mortgage agreement for the section on escrow. More than likely she is in default of the agreement thereby giving you reason to call the loan.

Answer: 

Answer by Randy Carey:She is likely in default of her loan agreement. Why would you release her from the escrow obligations and allow her to let the property go delinquent on the taxes? You are either going to have to pay them now or pay them later or in the long run lose the property as your collateral. You pay the billed taxes and the customer goes past due on the loan obligation. She either pays what she owes you or you start foreclosure proceedings.

First published on BankersOnline.com 9/29/08

First published on 09/29/2008

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