Household Mortgage Services, Household Finance Corporation/Beneficial Corp.,Therron ripoff!! Everyone acts dumb-founded and says they will call back!! College Park, GA California and Georgia

When a mortgage is “sold” to a different mortgage company, the original terms continue to apply and (assuming your mortgage company had an escrow account) the escrow account should have been transferred in its entirety to the new mortgage company to manage on your behalf.

An escrow account is generally required by the mortgage company to ensure insurance premiums and taxes are paid (protects against loss and tax liens). The escrow funds are the “property” of the person paying the mortgage, however managed by the mortgage company to pay the taxes and insurance. The mortgage company can not require more than 2 months excess of the anticipated expenses. After property taxes and insurance premiums are paid, the escrow account is analyzed. 2 months reserve (2/12th of the total) is retained in the escrow account. Funds in excess of the 2 months reserve for the projected expenses are refunded to the borrower, shortages are billed to the borrower. Escrow payments are adjusted (lowered or raised) to 1/12th of the projected total.

When a mortgage is paid (due to sale or refinance) the existing escrow will be credited to the borrower and applied towards late charges, interest, principal, or refunded to the borrower. A new escrow account is created for the new mortgage. I sold houses, refinanced mortgages (satisfying the mortgage), and had mortgages sold or assigned to different mortgage providers. I always received a closing statement from the original mortgage company detailing how all funds were applied.

The insurance company may have billed the wrong mortgage company, the escrow account may not have been properly transferred, or the original terms of the mortgage may have not been honored resulting in the premium not being paid as agreed. If there is no escrow account, you should receive the premium and tax notices and be responsible for paying taxes and insurance premiums. Failure in any of these areas would cause the lapse in coverage. All too often, the “assigned risk” insurance provider is actually a department or subsidiary of the holding mortgage company. The assigned risk premium is usually two to 3 times higher than a regular homeowner’s policy, and only protects the value of the loan. The assigned risk does not cover personal loss, liability, or the comprehensive coverage offered by a regular homeowner’s policy.

The insurance endorsement you received should contain the name and contact information for the insurance provider, as well as their policy number, premium, and when or whether it was paid.

Consult an attorney, report it to the office of your state attorney general, Office of the Comptroller of the Currency (www.occ.gov) , Mortgage Bankers Association www.mbaa.org , etc. Provide names and account numbers of both mortgage companies, the information from your insurance company (State Farm Insurance), the name and policy number for the assigned risk insurance provider, cancelled checks and receipts. Thoroughly describe the situation provided in this report. Include specific instructions and explanations, companies and names of personnel, dates, and copies of correspondence received from the above.

Misappropriation of escrow account funds, failure to properly account for expenditures, and the related fiscal abuses are punishable under certain banking provisions. Multiple civil and class action suits have resulted in refunds and damages being paid to the borrower.

I recommend that you research insurance companies, policies, and premiums. Get your own policy immediately and cancel the assigned risk insurance (request a refund), or have it go into effect before the assigned risk insurance expires (provide proof of insurance to the mortgage company to avoid being charged another year of assigned risk). The $1000 annual premium for the assigned risk insurance you describe is raising your monthly payment by $60 or more.