For those of you wondering what happened with the mortgage company and their possibly erroneous check, I called the company Monday morning and spoke with a representative who could not give me information about our account over the phone. She could only offer to send me a copy of the analysis in the mail. She did, however, assure me that our property taxes were paid.
Yesterday, we got the analysis in the mail. I didn’t understand it. Specifically, I didn’t understand how the mortgage company was returning to us $807 but also declaring that our monthly mortgage payment would increase by $22 a month (that latter part was news to me, and the new payment amount takes effect March 1; guess it’s a good thing I asked for a copy of the analysis). So, like any self-respecting adult woman who doesn’t understand something, I sent the analysis to my mom to figure out. Fabulously, she did. This is what she wrote:
I’ll try to strip this of gobbledygook, but it will be difficult.
In the wicked past mortgage companies could collect from you every month a sum to cover anticipated future tax payments, and keep it, without paying you interest, no matter if it gradually amounted to a sum far greater than was ever going to be needed, and they never had to refund it until, 30 years later or whenever, the mortgage was paid off. The abuses of this system were of course such that eventually a federal law was passed saying that they have to account for the amounts they collect, and there is a fixed percentage of the collectible amount that they may not exceed. If at the end of a year they find they’ve collected too much, they are legally bound to return the overage to you – hence this $807 check.
However, they have to collect from you each month a sum equivalent to what they anticipate 1/12 of the next year’s taxes will be. Your people think they will need an extra $22 per month from you, in addition to what they’ve legally been allowed to keep in your escrow account, in order to pay your next tax bill and have something over for emergencies, which they’re allowed to do. They can’t legally, however, keep $264 ($22 x 12) back from the $807 instead of raising your escrow payment; so they’ve had to send you this check and at the same time raise your escrow withholding.
Clear as mud, right? However, as I see it, you’re up $543 overall, so enjoy!
Thanks for your help, Mom!
So, $543 has just fallen beautifully and unexpectedly into our bank account. While I can think of lots of ways to spend this money, there’s one obvious place to begin. Since we got this good news on the same day as the devastating 8.8 magnitude earthquake in Chile, we’ll start with donating some of the money to relief efforts. If you’re also interested in giving money, here is an article on relief agencies accepting donations, and here is an article on ways to donate just $10 by sending a text message from your cell phone. You may also, of course, still donate money to benefit those affected by the Haitian earthquake. Here is an article on organizations providing different types of aid. And, if you donate by the end of the day Sunday, February 28th, you may deduct your contribution to help Haiti from your 2009 taxes. Of course, if you donate after February 28th, you may still deduct your donation on your 2010 taxes.