What happens if mortgage company forgets to pay your property taxes?
When you get a mortgage and the mortgage company agrees to pay
your property taxes, are they responsible for any late fees
if they miss the payments?
I have over $100 in penalties cause my stupid mortgage company
does not send in the tax payments from escrow.
Can I take them to small claims if they refuse to pay the penalty?
You HAVE an escrow account, and the lender will not pay the property taxes
from it?
There is a significant piece of the story you are not telling us. The lender
is required to pay the taxes IF you have an impound account. Tell us more of
your situation, maybe we can tell you where the problem is.
Did you recently purchase the home? If so, then the tax bill that the
impound account will not pay is the Supplemental Tax Bill. In this instance,
your house was - perhaps - taxed at one rate based on the value, and that
tax was paid at the close of escrow. But the value is now different -
higher - and the taxing authority will want the taxes at the same rate, but
at the higher value. This typically happens in the first year of home
ownership, and it can take the taxing authority up to 6 months to generate
the supplemental bill. This bill will come to you, NOT THE MORTGAGE COMPANY.
The mortage company will only pay the normal 1st and 2nd Half taxes as they
come due.
Different states have different rules, but I am sure they all must work
pretty much the same. I gave you an example of how it would work in
California. You can be sure that the taxing authority will want the very
most it can get. And you can also be pretty sure that the property value of
the previous owner was much lower than it is for you. Let me explain. I live
in a house that I bought 15 years ago for $150,000. My annual tax bill is
about $1875. My neighbor just bought the house across the street for
$400,000. The neighbor has a tax bill of $5000. We are both taxed at a rate
of 1.250%, but the assessment value of two houses is different. The
Supplemental Tax Bill is the bill that brings the property from the prior
owner's assessed value to the new owners assessed value. The Supplemental
bill will be prorated for the remaining period of the Tax Year, based on the
Closing Date of the escrow.