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Exterior of house with landscape.If you’re like a majority of homeowners today, you have a mortgage with an escrow account. And like most of those homeowners, you understand the basics of escrow, but when it comes to shortages and overages, it can be difficult to keep it all straight.

As a quick refresher, an escrow account is an account that holds the funds you need to pay your property taxes and homeowners insurance. It’s not an account that you manage directly. It’s simply a holding account that contains the funds you pay every month to ensure your taxes and insurance bills are paid.

By consolidating these payments into your monthly mortgage payment, you only have to worry about one bill rather than several bills all due at different times. We help you by making sure you have enough money in your account to cover your bills; then when they’re due, we pay them on your behalf. It’s a service that is designed to make your life easier.

So where does that money come from? It comes directly from your monthly mortgage payment. When you’re looking at your payment amount, it’s helpful to view the payment as two categories – one for principal and interest (the amount that goes toward paying off your home loan) and the other for property tax/homeowners insurance. How much of the money you pay that goes to your escrow account is determined by your yearly escrow analysis. The difficulty comes when trying to accurately estimate or predict the amount of taxes that will be required of you in the coming year.

Sometimes it’s overestimated, but often it’s underestimated. That’s where the escrow shortage appears. The most common reason for a shortage – or an increase in your payments – is an increase in your property taxes.

For example, if you buy a home that was built for you, your initial tax assessment will more than likely only consider the land value of the home. But once the property is assessed again, it will include the land value PLUS the value of your home. As a result, your property taxes will increase and so will your escrow payment. Which means, ultimately, your monthly mortgage payment will increase.

In other words, an escrow shortage is the result of not having enough money in your escrow account to cover the actual amount needed to pay your bills. It sounds as simple as it is.

Here’s another example:

If your annual tax payment is projected to be $2,400, $200 goes to your escrow account every month. ($2,400 divided by 12 months in a year). If your projected insurance amount is $1,200, $100 goes to escrow every month.

So if you have a $1,200 monthly mortgage payment, $900 goes toward your principal and interest, while the remaining $300 goes toward your escrow account every month.

However, at the time of your escrow analysis, let’s say that your taxes have been assessed and they have increased from the amount we thought they would be during last year’s analysis. The actual amount comes in at $3,000 for taxes and $1,600 for homeowners insurance – that’s a difference of $1,000.

TAXES: $2,400 – escrow analysis prediction

$3,000 – Actual

-$600 Difference

INSURANCE: $1,200 – escrow analysis prediction

$1,600 – actual

– $400 difference

Total shortage: -$1,000 for the tax/insurance bill.

At this point, you’re responsible for the $1,000 required to make up the total amount due for your taxes and insurance. Additionally, you’ll notice an increase in your monthly mortgage payment. The reason for this increase is to cover the newly assessed taxes and homeowners insurance.

To see a fully illustrated example of a mortgage escrow shortage, check this out.

Here are some more things to consider:

Is there a difference between an escrow shortage and an escrow deficiency? While these words may seem similar, in the world of escrow, they’re different entities. An escrow shortage occurs when there is a positive balance in the account, but there isn’t enough to pay the estimated tax and insurance for the future.

An escrow deficiency is when there’s a negative balance in your escrow account. This happens when we’ve had to advance funds to cover disbursements on your behalf. So not only are you going to be short for your upcoming tax and insurance payment, but you also owe money to bring your account current.

How often does the escrow account get analyzed? We look for changes in tax and insurance in the form of an escrow analysis once a year. However, if we see an issue that requires further examination, we can repeat an analysis to determine its impact on your payment. For example, if we’re noticing an increase in your taxes of 25% or more, or noticing a shortage over a certain amount of money, we’ll open another analysis.

How can you be proactive in managing your escrow account? Pay attention to any information you get from your city regarding tax information or from your homeowners insurance company. They will often send you information in the mail about trends and increases. This can help you plan ahead. Keep an eye on insurance trends yourself and shop around to make sure you’re getting the best rate you can. Or, set aside a savings account you deposit a set amount into as an escrow back up plan. This way if your escrow account does wind up short, you’ll have the extra funds to pay it immediately rather than roll that into your monthly payment.

Rates have nothing to do with your escrow payment. “But I have a fixed-rate mortgage! My payment is not supposed to increase.” Which is true, and it doesn’t. Remember how I suggested to view your monthly payment as two parts – a principal/interest part and the escrow part? If your rate is fixed, the amount you pay toward your principal and interest doesn’t change. The amount that does affect your monthly payment is the taxes and insurance part.

For example, using the same numbers from our example above:

10-year mortgage: $1,200 monthly mortgage payment of which $900 goes toward principal and interest, and $300 goes to escrow.

The next year, your city’s taxes increase. The new estimate states we now need $500 per month instead of $300 to cover your tax and insurance bills. This increases your monthly mortgage payment to $1,400. $900 of that amount still goes to your premium and interest. It has not changed.


But if I’m only short X amount, why am I required to pay Y? Here’s a real-world scenario: I received my escrow analysis statement and it said I’m short $1,600. The only thing that changed is that my homeowners insurance went up by $800. Why am I paying double?

Here’s the rub – the escrow account was short $800 to cover the payment for my insurance. So I’ve got a deficit of $800. The other $800 makes up the difference for the future payment of my homeowners insurance. This will get me caught up and hopefully not in a shortage situation next year. Effectively, I’m paying $800 for last year and then $800 for this year.

Did we clear up any escrow shortage questions? Let us know in the comments!

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This Post Has 146 Comments

  1. Is it possible to have both an escrow deficiency AND an escrow shortage? I understand that my taxes were underestimated and I therefore owe the balance (deficiency) but how can I also have a shortage (“An escrow shortage occurs when there is a positive balance in the account, but there isn’t enough to pay the estimated tax and insurance for the future”). My summary states that I owe 717.84 from deficiency and 1,481.16 from shortage. First time home owner- please help.

      1. I’m just wondering if there’s been an answer to this as I too just received a summary stating I owe $378.20 in deficiency and $1,687.51 in shortage.

        1. Hi Dale:

          I’m going to recommend you talk to one of our Home Loan Experts. They’ll be able to give you much more detailed information on escrow accounts than I can. You can get in touch with them by calling (888) 980-6716 and we would be happy to go over your situation.

          Kevin Graham

  2. well I’ve been in my new house only a year now and i got this annual escrow account disclosure statement and change of payment notice saying my projection low point of 1476.03-. my required reserve balance is 1134.82. this amount represents 0,1 or 2monthly escrow payments less any monthly mip/pmi payments. this is based on the terms of your mortgage contract, federal or state regulations. the difference between the projected low point and required reserve balance is 2610.85 This is my shortage with has been prorated, added to your monthly payment and will be collected from you in a 12 month period.

    1. Hi Ben:

      It sounds like you have an escrow shortage. This is caused by an increase in the amount of your property taxes or homeowner’s insurance that would cause your lender to have to collect more in order to pay them out. You can find out if either of these things changed by contacting your insurance company and the county. If you contact your loan servicer, they should also be able to tell you what changed, by how much and what your options are.

      Kevin Graham

  3. I recently got an escrow analysis letter saying I owed my lender $1464 “due to increased taxes”.
    I watch my tax and insurance amounts — I had NOT had such an increase. This must be an error.
    I checked the escrow accounting — IT WAS.
    My property taxes are “summer” (about 3/4 of the annual tax) due in September, and the remaining “winter” due in February.
    The lender had entered the larger summer tax amount twice, creating a huge error in the tax due.
    They also showed my taxes as due in June and December. This created an ARTIFICIAL “shortage” — my escrow for the higher summer tax would not rise to the amount needed until September, when it was actually due.
    In addition, they illegally included my mortgage insurance (PMI) amount in their allowable 2 month escrow “cushion”.
    I called my lender and pointed out the accounting issues.
    The escrow analyst misrepresented what is “required by law”, laughed off their bad accounting, saying that they had made a mistake, but the amount was still due.
    She also did not know that she could not legally use my PMI to calculate the lender’s escrow “cushion”.

    I encourage other borrowers to check their mortgage contract escrow section.
    If escrow is to be managed under the federal real estate law RESPA, which most should be, there are regulations which protect them.
    Search the Internet: “RESPA escrow” to learn more.
    RESPA protects both borrowers as well as lenders, prohibiting many common “accounting games”. RESPA requires lenders to abide by specific, fair escrow accounting practices.

    I continue to address my escrow account issues with my lender.
    I have calculated the proper escrow projections so I am aware of how the escrow should add up. The math is tedious but basically simple, and it is not difficult to use the RESPA accounting.
    I have now received a new lender statement, that reduces the “shortage” by over $500.
    Other accounting errors remain that I will continue to address with the escrow analyst.
    Once corrected, the bill will be ZERO.

    I am NOT WILLING to let my lender intimidate me with their unexpected high bill.
    I will NOT accept inaccurate information from an “escrow analyst” ignorant of the laws she must follow.

    I encourage other borrowers — DO NOT let your lender panic you.
    Do not let fear immobilize you.
    Know your actual expenses and date due.
    Learn your legal rights and protections — speak to your attorney, if needed. The cost of legal advice will likely be worth it.

    I do NOT owe my lender for a supposed “escrow shortage”.
    My escrow amount for the coming year will rise by only $18 for the ENTIRE YEAR, to cover a slight increase in tax and insurance. I can handle the extra $1.50/month.
    I will continue to monitor tax/ insurance costs, so I am not caught off guard by any future REAL increases, and I will put aside money to cover them.
    In your replies to concerned borrowers, I do not see you mentioning the RESPA rules that protect them.
    Please do.
    Borrowers should know that there are laws that govern lenders as well as borrowers. Laws govern their escrow account management.

    1. Hi Barb,

      I just wanted some further information. I purchased my home exactly 1 year ago and my lender (whom I had issues with initially closing) is saying there is a shortage of 3k (2996.23). However, like you mentioned there was no rise in taxes or insurance.

      Did you consult an attorney to fight back? My lender deliberately made a mistake as per a 3 hr phone call I had but is still expecting me to pay this by Oct 1, 2019. I just received this communication on 09/03/2019.


      1. Hi Ashlea. We’re sorry to hear about your experience. Do you have a mortgage with Quicken Loans? If so, we can pass your information along to our client relations team and have someone look into your situation and provide assistance.

  4. My mortgage recently increased by $550.00/month due to a rise in taxes and insurance as well as an escrow shortage of $4,000.00. I’ve never been late on a payment and always paid my mortgage amount due. It seems the mortgage company underestimated for the tax increase in my area for the past 2 years and now i’m stuck with the bill. When I reviewed the numbers I noticed over the past 2 years my mortgage has been decreasing. I sent them a long email detailing what I found and they responded saying “our original analysis is correct.” What can I do in this situation? I can not afford this additional monthly payment and they aren’t offering any options.

    1. Hi Amanda:

      Unfortunately, when this happens, there’s no real great way of getting around it. Mortgage companies have different policies for when they conduct their escrow analyses. It’s also even more complicated because state governments have different policies in terms of when taxes are reassessed. I would take a look at your taxes and make sure you’re claiming all the exemptions you possibly can. If you have any doubt, I would go to a tax adviser.

      The other thing you can take a look at is whether it makes sense to refinance. It wouldn’t directly help with your tax and insurance problem, but if you could lower your rate or payment, it would leave more leftover for incidentals like this. If you would like to discuss your options on that front, you can reach out to one of our Home Loan Experts by filling out this form or calling 888-728-4702.

      Kevin Graham

  5. Hi,

    So my mortgage payment went up because of an escrow shortage. I had to change insurances a couple different reasons mainly because my insurance guy messed up twice. So at this point once I pay off the escrow shortage will my payment go back down? And if so when does that happen? I have been paying extra on it since it happened last november. Thanks for any help

    1. After you pay off the shortage, your payment should go back to what it would normally be under your new insurance policy. It’s worth noting that we are generally in a period of price appreciation in terms of property values nationwide. If your property value rises, so would your taxes which could put you short when they next do an analysis. I just want to make sure you’re prepared.

      Kevin Graham

  6. New built house completed on December 31st, 2014. Our first mortgage payment was on March 1st, 2015. My payment includes mortgage, PMI, Insurance and taxes for amount of 1986. October 2015, we get a check for 900 saying escrow was in overage. Payment went to 1865. Now, September, 2016, we received a letter stating that our escrow in short by 2800. Either we pay in full or pay extra 340 per month for 12 months then after that, our 1865 goes to 1970. My 2015 taxes were higher than the 2016 taxes by 400. How can this be? We will lose our house. Need advice please. Jeff

    1. Hi Jeff:

      Since your taxes didn’t go up that’s not it. PMI doesn’t go up. If you changed insurance policies, that could have an effect. However, generally you know if you change insurance policies. The only other thing I can think is that they mistakenly sent you the overage check. I would talk to your loan servicer and figure out what’s going on. If it ends up not being a mistake, you’ll have a higher payment or that lump sum to pay off. That being said, if making the mortgage payment is untenable, you can talk to your servicer about modification options. I hope this helps!

      Kevin Graham

    2. Hi Jeff. I got a large overage check last year, too… About $800. Then I just got an escrow shortage bill for $1464….
      My expenses have been quite stable for years. It was a shock…
      To get to the point, the “shortage” was an error, caused by 3 different accounting mistakes in the escrow calculations.
      1) They showed my tax payments as due 3 months before they actually ARE due… This resulted in showing a ” shortage” for a month they SAID they needed to pay the tax, but the escrow ACTUALLY was fine, if allowed to accrue to that REAL later month the payment was due…
      So, check your escrow statement carefully to see if there are DUE DATE ERRORS creating artificial escrow shortages.
      2) They had inaccurate figures for my property taxes. I have one high tax bill and one low tax bill per year — they showed the higher figure twice…
      Be sure their figures match your actual property tax/insurance bills.
      3) They used my mortgage insurance in calculating their “escrow cushion”. That is not permitted by RESPA.
      They COLLECT the mortgage insurance but that amount must be subtracted in calculating the lenders “cushion”.
      A lender may refer to this “cushion” as a “required minimum balance” in your escrow account, but you should check your mortgage contract to see if that is stipulated there. RESPA law says they are PERMITTED to have no more than 2 month’s escrow amount in the “cushion”, but they are NOT REQUIRED BY LAW TO have that much. It can go down to zero, as long as you don’t go into an escrow “deficit” (negative balance).
      Check your mortgage contract escrow section to see what it says.
      Due Date mistakes by the escrow analyst can result in erroneous “shortages” in the “cushion” as well as needed amount to pay taxes/homeowner insurance.

      I have the feeling that the lenders are using escrow calculation SOFTWARE with date and cushion amount calculation DEFAULTS, that are producing errors, because lender staff are not inputting borrowers’ proper data, and allowing defaults to rule.
      Double-check your statement carefully for mistakes that may have been made by improper data input.
      Best wishes on wrangling with your lender.

  7. Hi. I love in Florida and have an issue with my mortgage. My family got a notice for escrow shortage and after a huge chase of everyone blaming everyone else we went over our tax documents from the mortgage company and realized they tacked on another insurance policy. Wells Fargo originally held the mortgage but it of course sold to another company. When confronting the mortgage company they are saying our insurance that was acceptable for Wells Fargo mortgage is not up to thier standards therefore they add their own insurance on which mind you is more than we pay for the insurance we already had. We had no notification of changes or new insurance requirements that we weren’t meeting. Is this something we should be responsible for?This has increased our mortgage payment now that they are making us pay the extra insurance monthly.

    1. Hi Amanda:

      It is very common for mortgages to be sold between companies and they all have slightly different policies on various issues from one to the next. That being said, they should have given you notification of some sort. Also, if I understand correctly, you’re now paying for two insurance policies. Unless the second one was supplemental to add more coverage, you should be able to cancel the old policy that wasn’t meeting the requirements. That would save you some money. Unfortunately, I have a feeling it was supplemental.

      Kevin Graham

  8. In 2009 I purchased a home, (I’m in Texas). My parents co-signed the loan for me.
    My mortgage payments include taxes and insurance, and I have never been late on a payment.

    In 2015, the bank only paid half of my county taxes. They have ALWAYS paid in full in the previous years, even though my homestead exemption is 50% since my parents co-signed, but do not reside with me.

    Around Jan or Feb 2016, I received an escrow check, unaware my taxes had not been paid.
    March 2016, I received a delinquent bill from the county (around $3000). This was the first I knew of my taxes not being paid.
    I emailed the bank to let them know (several times), and each time they told me that the taxes were paid in full. I have written documentation letters from them stating the taxes were paid.
    I kept getting bills from the county, so I finally made a payment of $400, as I didn’t have the money to pay in full.
    July 28, 2016 I received a letter from an attorney stating they are going to foreclose unless the taxes are paid. I called the county to set up payment arrangements, only to be told the bank had finally paid the taxes the day before.
    A few days later, I get an escrow shortage letter in the mail from the bank, stating my monthly payments are increasing (an increase of almost $800), or I can pay the shortage amount of $6200, which includes attorney and late fees.

    So here are my questions:
    1. Am I legally responsible to pay the $6200? I don’t understand how I could possible be, since I made my monthly payments on time, and repeatedly told them the taxes had not been paid.
    2. Does the bank have to reimburse me the $400 I paid to the county? If so, how do I get them to pay?
    3. If I am responsible to pay the $6200, is there a legal time frame the bank has to give me? They want me to pay it within 12 months, but I cannot afford that payment. Is there a time frame they must give me? I could afford to stretch it to 24 months….

    Thank you for your time.

    1. Hi Sara:

      The short answer is that you’re almost certainly responsible for the taxes. I’m guessing you were short on your taxes because the bank hasn’t done an escrow analysis in a while. How often an escrow analysis is done depends on what state you’re in. They all have different policies. In Texas, property is assessed every year. The mortgage company does an escrow analysis every year, but it’s not necessarily at the same time taxes are assessed. You’re going to have to talk to the mortgage company about a payment arrangement.

      Kevin Graham

  9. I received notice that Escrow had a shortage of $467.37, and that my payments would be going up $295.99 per month. It’s hard enough making ends meet as it is. This has never happened before…the mortgage company has definitely thrown a curve ball this time!

    1. Hi Janet:

      Maybe the best I can tell you is to make sure you’re claiming all the property tax exemptions you qualify for. Otherwise, rates are really low right now. You could always take a look and see if refinancing makes sense to lower the payment. Good luck!

  10. My escrow deficiency is due to being placed in a HAMP program, which was completed in October 2015. In May of this year I received my escrow analysis, which showed a deficiency, we owed $5300.00 or our payment would go from $744.00 to $1501.00. Obviously we can’t afford this, but the mortgage company is offering no options. We need help

    1. Hi Kim:

      The first suggestion I would make is to talk to a tax adviser and make sure you’re taking advantage of all possible exemptions.

      You may be able to refinance and lower your payments a bit, but I’m not sure how that would work given the modification. It’s really best for you to talk to someone that can help you go over all of your options. If you fill out this form, one of our licensed mortgage bankers can contact you.

      Kevin Graham

  11. I’m in the same situation. I had an escrow shortage last year and my mortgage went up $400 a month. Today, I got a notice of another escrow shortage of $3,941 which will be about $348 extra dollar a month. I’m already paying $1,640 a month. At this speed, I’ll ended up paying over $2,000 a month in mortgage. I cannot afford my mortgage going up every year. What can I do? Please advise.

    1. Hi R:

      To start, I might talk to a tax advisor and make sure I’m claiming all the property tax exemptions I can claim. Beyond that, you might take a look at refinancing. Rates are pretty low right now and your payment might be able to go down a little bit. If you fill out this form, we can have someone reach out and go over your options.

      Kevin Graham

  12. I have an escrow shortage of $ 2900 the mortgage company said that the city didn’t not report the correct estimated amount of taxes for this year and that is how it happened my mortgage is set to increase by 400 dollars and we simply cannot afford this. I don’t understand shouldn’t the city be responsible for not reporting the proper amount to the mortgage company?! How is this purpose fault and now we are being expected to pay an extra 400 dollars a month

    1. Hi Julie:

      I don’t know what your options might be with either the mortgage lender or the city, but I’m going to get this to a Home Loan Expert so we can offer whatever advice we might have.

      Kevin Graham

      1. This exact scenario just happened to me plus a $2500+ escrow deficiency on top of that. Any advice would be appreciated.


        1. Hi Giovanni:

          I’m sorry to hear that. I’ll put you in touch with one of our Home Loan Experts as well to see what kind of advice we can give. They’ll be reaching out.


    2. If your insurance increased $800.00 and an additional $800.00 is applied for the following year so there is no shortage, then would your mortgage payment increase by the additional $1600.00 needed?

      1. Hi Vivian:

        This gets slightly complicated because there can theoretically be a period of time between when the insurance payment goes up and when escrow is analyzed that can lead to a shortage, but the scenario you’re describing is the way it’s supposed to work. If your insurance were to go up by $800 in consecutive years, your mortgage payment would be $1600 higher over the course of the year.

        Kevin Graham

  13. I have been calculating and staying up with the escrow for the last three years. Last year was the first year that my escrow went up for several years. Our taxes and Insurance did increase a bit. Making my payment increase 15.87. This doesn’t seem like much but it is when they continue to increase your monthly payment each year. I had a balance of over 500.00 in my escrow at the point of analysis but because of when my insurance payment is due causes me to fall below the required balance of close to 400.00 to remain in the escrow account at all times, then they are now starting to increase the escrow payment every year. I can not continue to have an increase of my mortgage payment every year, that’s ridiculous. I sent a request in to pay my own taxes and insurance. I myself can maintain my payment without giving them a required 400.00 of my money to play with during the year plus it saves me on my monthly payment not going up every year plus the monthly savings for my actual payments is far lower then their estimated projections. So, I am saving in two ways. On my mortgage payment and on the amount actually required to save for the actual payments on the real estate taxes and the home owners insurance. Now I just pay them my mortgage payment period which will work out just fine for me…I am perfectly capable of adding together the total of my payments, taxes and insurance and dividing that total by 12 and saving this amount monthly or just paying them out right if possible..PROBLEM SOLVED..

    1. Hi Nancy:

      I’m glad this has worked out for you. Some people may not have this option because the investors in mortgages require an escrow account as a method of foreclosure prevention. However, if you can do it and keep up your payments, it’s certainly a good option.

      Kevin Graham

  14. I’m in a similar scenario. My mortgage which is a 30 year fixed has had an escrow shortage for the last 4 years! Every year we make the increased payments assuming it will fix itself, and then the next year it’s even worse. Today I got notice that our payments are going up an additional $44 per month. Seems small but when you’re already crunching numbers it’s hard to factor in even more money. We’ve had this house 9 years, so i thought with property taxes going down and insurance at the same rate that the shortage would be nonexistant. My trouble is that our property taxes are the lowest they’ve ever been and my monthly insurance payment had never changed. So I’m lost as to how we are short $720 according to the analysis given were on our 4th year of doing this. Why does it keep continuing? Did someone miscalculate??

    1. Hi Angela:

      If the situation really is as you’re describing, your escrow probably shouldn’t be going up. I’m going to have someone reach out and see if we can offer any advice.

      Kevin Graham

  15. I’m dealing with a situation similar to Nick’s. My monthly payment currently is $960 and in May it’s going to jump to $1850 due to a shortage in escrow.

    1. Hi Ivette:

      We would be happy to look into your situation and see if there’s anything we can do to help or at least offer advice. Thanks for reaching out!

      Kevin Graham

    2. This is second year in a row that QL has grossly underestimated my escrow. With all the technology out there how is this happening? Why was I not notified sooner so I could pay monthly and not get hit with a big bill at income tax time? Something is wrong here.

      1. Hi Fred:

        I’m sorry to hear you’ve had this negative experience with us. We’re currently researching your situation and someone will be reaching out to you later today to see if we can get this turned around for you. Thanks for reaching out.

        Kevin Graham

  16. Hi
    I was wondering if this forum is still open. My issue is similar to Nick’s as my mortgage amount has drastically increased. My mortgage company has withdrew double the amount of funds from my bank account without any notice to me which caused my account to be overdrawn. In the past, $1750 was being deducted from my account for my mortgage payment. This month, $3400 was deducted from my account. I called the mortgage company and they said it was for home owners insurance and taxes. They told me next month that I MUST mail my payment to a specific person and that my payments will not decrease. I asked the mortgage company to explain exactly what is being included in my monthly payment because my flat mortgage is only about $1150/per month but they avoided my question. I fear that I will end up homeless. I need to figure out what is going on.

    Thank you,

    1. Hi Alicia:

      That’s an unfortunate situation. For starters, someone from your mortgage company should be able to tell you why your escrow account was that short. That seems like an awfully big amount for your taxes to increase. I’m going to have someone reach out and look into this with you to see if there’s anything that can be done.

      Kevin Graham

      1. I’m going through the same thing, in May my payment went from $743.00 to $1501.00. Is there anything we can do?

  17. I have an escrow shortage and I know how escrow works and even informed my mortgage company that there was going to be a shortage, but they didn’t listen to me. I want to pay my shortage in one lump sum so that my monthly mortgage payment doesn’t jump up too high. If I don’t pay it in one lump sum they said it will be figured into my monthly mortgage payments over the next 16 months? I thought a year was 12 not 16 months? I also want to pay additional escrow to add as a cushion and lower my monthly mortgage payments. Would this work and would a mortgage company allow this? Because truly it benefits them in the long run…extra money in the account means no mortgage shortage.

    1. Hi Kimberly:

      That’s a lot of escrow questions and I’m not sure how much we can answer because different mortgage companies may have different policies. That said, I’m going to get this to a Home Loan Expert who might be able to give you some general information.

      Kevin Graham

  18. If I pay the Deficiency and Shortage off in one lump sum in February should there be another Deficiency and Shortage for the next year?

    1. Hi Nancy:

      I encourage you to verify this information with your loan servicer as every company does things a little differently. An escrow shortage is created by your taxes and insurance costs being higher than planned on. Since both costs can be subject to increase every year, even if you pay your shortage amount in full via one lump sum, you may still have a shortage the next year. You can help to prevent this by shopping for a lower insurance premium or applying for tax exemptions.

      Kevin Graham

  19. You guys need to answer the questions directly on the website… im here to learn from others situation… and it does no good reading… ill have an expert contact you..

    1. Hi Tony:

      While we try to answer as much as we can here, many of these answers are heavily dictated by the personal financial situations of our clients and public commenters. We take privacy very seriously. That said, we’re committed to helping you learn as much as possible and the comments are part of that. If we can answer something publicly, we absolutely do.


  20. So if me the customer cannot handle the escrow account, why is it my responsibility to cover the short? The mortgage company is responsible for the assessment and handling of escrow yet me the homeowner gets the short end of the stick. How is it legal for the mortgage lender/company to underestimate escrow payments every single year, causing the home owner not only large lump sum payments, but also sporadic annual increases in monthly payments that wouldn’t be legal in any other industry? Is there legal recourse against the mortgage company? By any definition since the mortgage company is responsible for handling the escrow account, any shortage should be considered negligence on the mortgage company’s side because you did not use due diligence in an annual assessment. How can you refuse the homeowner ability to handle the escrow and not take responsibility for you inaction and incorrect assessment?

    1. Good morning, Beatrice:

      Property tax assessments are conducted at different times throughout the year depending upon which state you live in. Because your taxes could change in any given month, the mortgage company cannot necessarily anticipate this. Also, homeowners can change insurance at any point. Because of this, lenders conduct escrow analysis once a year and your payment changes after that point. As a consequence, there’s sometimes a short in the amount of money that’s in your escrow account to cover taxes and insurance. I’m going to pass your comment to someone who can tell you more than I can on this topic. Thanks for reaching out!

      Kevin Graham

  21. My Mortage company is using incorrect tax amount due for tax escrow analysis. I have asked them to re-analysize the escrow using what is really due anually. I want to provide them with copies of the county tax appraisal. And all they tell me is diffinition about actual vs. projected. My payments have doubled. (that is making me late) I can possible afford these paymnets for a month or two but not for the rest of the year. I don’t know what my options are. The mortgage company has also failed to pay my property taxes for 2014. And when I ask them about this they just tell me that they are researching. But that if don’t make the addtional escrow they will forclose on my home. Do I have any options, Do I need to hire a lawyer or what?

    1. Hi Reyna:

      I’m going to have one of our Home Loan Experts reach out to you and look at any options you may have.

      Kevin Graham

  22. We were recently notified that our shortage is $6363, making our monthly payments go from $1183 to $3083. Clearly, this is completely outrageous and there’s no way I can afford that. Everyone I talked to says I’m pretty much out of luck. Even if I paid the shortage in full, my new monthly payment would be $2553. What can I do? I’m pretty sure I’m going to lose my house over this. This was never told to us upon signing that there was a chance it would increase by more than double. I was ready to pay a little more once the taxes were figured out, but there is no possible way I would have agreed if I knew I’d be paying $2500-3000.

    1. Hi Nick:

      I’m going to have someone reach out and see if we can help you out with this. They’ll be in contact shortly.

      Kevin Graham

      1. Same situation our mortgage was 740 went up $300 for esgro ahortage. My husband decided to pay it in full $2000+ but now our mortgage payment went up to 1700!!!! Why!!! He’s on the phone trying to deal with this now

        1. Hi Amy:

          I’m going to have someone reach out to see if there’s anything we can do for you in terms of getting you into a better situation. At least you could get some advice. Someone will be reaching out to look into this.

          Kevin Graham

      2. Our situation is exactly what Nick experienced. We don’t know what we are going to do. Do we need to get a lawyer or should we sell?

        1. Hi Joshua:

          I’m going to have one of our Home Loan Experts reach out and look in your situation so that they may be able to provide you the best information for your circumstances. They’ll be in contact. Good luck!

          Kevin Graham

  23. My escrow account has skyrocketed due to the increase in my property taxes. I am considering to refinance but I am at a loss. I am only paying 89$ a month toward my principal and over 1k in escrow. The worse part is that I was already told my payment will increase an additional 300$ starting in January. I may loose my home if I can’t pay for the escrow. If only I could get out of escrow I would be ok paying for my home and setting money aside each month. Is there any one that I could go to for advice in this matter that uses common language? I do not understand the language used by the mortgage company and it is very frustrating and scary. I have a son and may end up loosing my home. if this keeps up.

    1. Emily-

      We only work in plain English. I can have a Home Loan Expert reach out to you and check into your situation to see if we can explain things and maybe help you out. Have a great day!

      Kevin Graham

  24. I am experiencing this very same mortgage increase due to a tax increase and a subsequent increase in my mortgage to make up for the shortfall in the escrow account. My real issue is why cant my mortgage payment return to its normal level once my escrow payment is caught up? I’ve asked my lender the same question and I got a confusing answer that simply put, they said no. The increase will stay the same even if I made a lump sum payment to get my escrow account back to par. Why is that ?

    1. Thanks for your comment, Tobias. I’m going to have a home loan expert reach out to you. They’ll look into your situation and give you the best possible answer. Have a good one!

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