Homeowners Insurance - Watch Your Escrow

Our Homeowner's Insurance Company is wacked. They don't seem to know what they are doing. And, my mortgage company (escrow account) can't keep up with their changes.

We contracted with an insurance company in June of 2004 for a homeowner's insurance policy. It was, of course, a requirement of our mortgage company that we make payments into an escrow account to pay the insurance premiums.

OK. That's fine. The mortgage company is making the insurance payments - accurately and on time - right?

Well, not exactly.

In July of 2005, we get a bill from the homeowner's insurance company for $29. Thinking this was a mistake since our mortgage company pays our homeowners insurance, we call the mortgage company.

They say they don't know what the bill is for, and their records show a payment made to the insurance company in May of 2005. It was paid in full (not a quarterly payment), so it shouldn't be due again until May of 2006.

So, we call the insurance company. They say it's an increase.

OK. We call the mortgage company again and tell them the insurance went up. The mortgage company says they will pay it. Just send the bill to them.

They make the additional $29 payment in July.

A few months later the mortgage company does an escrow analysis and raises our mortgage payment to reflect the increase in the insurance policy. That's fine; we were expecting the increase.

Since I'm a meticulous record keeper, I went to the mortgage company website to get a printout of the escrow analysis for my records and noticed that the $29 payment that was made in July 2005 was added back to escrow in August 2005.

What? Why did they do that, I wonder. The extra insurance bill/payment must have been a mistake, I think. Maybe our insurance shouldn't have gone up, so the insurance company issued a credit back to the mortgage company. Why else would we have a credit to our escrow account?

Now I'm watching the escrow account more closely. I see that the mortgage company makes the homeowner's insurance payment in May 2006. It's for the same amount that was contracted for originally. So, I figure (the bill and) the extra payment that was made was a mistake.

At the end of 2006, the mortgage company does its annual escrow analysis and issues a refund. According to the analysis, their projected payments from our escrow account were too high. They didn't actually have to pay as much as they thought (projected) they would, and they are refunding the overage.

So, I figure that extra $29 payment must have been a mistake. I fall back into trusted complacency again.

Oops. It was a mistake to trust that they know what they are doing. This year we get a bill from some insurance company that we have never even heard of. Upon calling our insurance agent we learn that not only has the insurance company changed its name (over a year ago), but our homeowner's insurance has gone up again.

Again? Yes. It seems that bill we received in 2005 was for an accurate increase. It has increased again for 2007.

So, I'm looking forward to another round of phone calls between the insurance company and the mortgage company. They can't get anything right.

My advice to you? Keep a close watch on your escrow account, and notify your mortgage company of any changes in your homeowner's policy. Don't, not for a second, rest assured that those two companies are keeping up to date with one another.

Ultimately, it's Your Responsibility to make sure everything is paid - accurately and on time. Don't trust your mortgage company to handle it correctly.