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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!

This Post Has 152 Comments

  1. 2018 I had a shortage, they added on to my monthly payments, then in 2019 I had another shortage ok, it will be added on to my payments, but my question is they are adding it to that amount that I have a shortage on , I thought it should go back to the original amount then add the shortage to that amount (before the first shortage)?

    1. Hi Lynn:

      If you have a shortage, the idea is that the shortage is added on to your monthly tax and insurance payment at the new higher rate. This way, they try to avoid having a shortage the next year. However, you may end up with a shortage again in the event that your taxes or insurance continue to rise on a yearly basis. It’s not going to go back to the original amount because your taxes and insurance have increased, which is the reason for the shortage in the first place. I hope this helps!

  2. I was just looking at my Escrow payments and shortages, and although I have had shortages for the last two years, my mortgage payment has stayed pretty much the same. This year, my escrow shortage was $1526.36, which I could not pay up front, so the statement said I could pay it over the next 48 months, and my monthly mortgage payment was $1267.02, and my new mortgage payment without making the large one-time payment would be $1266.10. Last year in 2019, it was similar with a shortage of $1922.42, and an old mortgage payment of $1229.34 and without making the large one-time payment, which I did not make, my new payment would be $1267. 42 and it stated it would pay the shortage over 60 months, so it did go up a little that year.

    I should also mention that in 2018, I had some financial trouble and had to refinance my mortgage to a 40 year mortgage from a 30 year mortgage. Did this do something to how my Escrow payments are made? My main concern is that at some point I may have to make either a huge payment on Escrow, or my mortgage will rise again to a level I may not be able to handle. Do you have any information for me to avoid these scenarios?

    1. Hi Bill:

      I’m going to recommend that the best way to handle this would be to speak to your servicer. Your situation isn’t necessarily covered by normal escrow scenarios. Normally, you have the option of paying it back in a lump sum or doing so over the course of 1 year as opposed to 4 or 5. That’s likely due to the modification of being in a 40-year mortgage and I’m wanting to keep your mortgage payment as close to the same as it can be given your previous financial struggles. Given that, I think it’s best to ask these questions of your servicer specifically. If that happens to be Quicken Loans, you can give us a call at (800) 508-0944. Have a great day!

  3. I have a very important situation that could use your help. My taxes have increased around $100 each year that I’ve been in my house, so my payment increases around $20 per year. My taxes came in this year and sure enough, they went up $150.88 for the year, my insurance actually decreased by $8 for the year. So why is it that our mortgage company says we have a shortage of $2600 and expect us to pay an additional $202 per month to catch it up? Furthermore, they told my husband today that the shortage has been accruing since March, yet nothing was said to us, also in February, we received a check for $680. There was no explanation, so we just deposited it. They now say it was an escrow overage in the amount of $1500. Firstly, we only got $680, not $1500 and secondly, how in the hell can we get an overage check one month then the very next month start with a shortage. Our taxes and insurance haven’t increased enough in the 10 years we’ve lived here to account for this. They take out over $500 per month of our payment for escrow. It sounds to us like someone hasn’t been handling the money properly and we do not and will not have the money for an almost $1300 mortgage. Don’t know what to do. could use your help in New Jersey.

    1. Hi Kelly:

      I’m slightly confused when you say your taxes go up $100 per year, so your payment increases $20 per year. In theory, those figures should match up over the course of the year. It is possible to get an overage check and have a shortage shortly thereafter in theory. Counties assess taxes at all different times of the year, so shortages and overages happen because unless they happen to assess in the same month, there’s a period of time between when the county does its assessment and the month in which your mortgage company analyzes the escrow accounts in New Jersey, for example. You might not get the full amount of the overage check if the mortgage company had a policy that you had to keep a certain number of months’ worth of tax payments in your escrow account in order to avoid things like shortages, but it doesn’t sound like that remotely worked in your case. If you’re worried about mismanagement, one thing you can ask for is a record for the escrow account which shows both your payments as well as their disbursements. They should be able to produce that for you. If they can’t, there’s a problem.

      Regardless of what you think happened, the first thing I would do is call the county and see if the records match what the servicer is telling you. You can also see if you might be able to get on a more affordable payment plan with the county and report that to your servicer which might help lower your monthly escrow bill.

  4. I understand what an Escrow shortage is and how it works. My question is why do I keep getting one EVERY single year? My home’s value has gone up, yes, and property taxes have risen as well, of course, but… not that much! The increases just – keep – coming!

    Is there another factor that would contribute to an increase in property taxes besides an increase in the value of the home?

    1. Hi Alison:

      The property tax payments for each year as estimated by your mortgage servicer don’t have to go up that much for there to be a shortage because it’s still an increase. With that said, other than an increase in the value of the home, the other things that would cause an escrow shortage are an increase in homeowners insurance premiums or a loss of property tax exemptions you had previously qualified for. I hope this helps!

  5. I just received an escrow statement. It says that I have an escrow shortage of -$9194. They are telling me I can make one lump payment in that amount and my payment will go up by $320 (to $3441). Otherwise, my payment will go up by $1085.51 (to $4207.77) for 12 months. Does this mean at the end of the 12 months my payment will go back down to the $3441, give or take depending on any fluctuation in my taxes/insurance? This letter has almost given me a stroke so any help would be appreciated.

    1. Hi Melody:

      Your understanding is correct. At the end of the 12 months, it would go back to what your normal payment would be. It would just go up or down based on whatever your current taxes or insurance are at that time.

  6. question i am confuse on this escrow stuff just make no sense why every year my mortgage keep going up bought my house on Dec.2017 a payment of $897 i belived everything was good for the year of 2018 , in January 2019 things change one analysis was perform i was told that my tax and insurance have gone up , i ask them for prove never got any until i recevied a letter form my insurance it when up from $790 something dollar up to $1415 dollar so i was short in my escrow about $750 somthing dollar my taxes never or havent gone up so what i did is i went and switch insurance on march to a lower primium insted of me paying $1415 i got a new one for a $1095 so i got a refund of $900 something dollar never got the full refund why i dont know, then after my lender did another analysis on march of 2019 i ask why they said that was my analys month every year i ask why yall did one in January never got a response so in that same month my recent insurance got cancled too for roof problem so i got a refund also , i never return the refund to my lender my question is would this cause a shortness on my escrow and why , went i am still paying for them on my monthly payment this is what i dont get

    1. Hi José:

      There’s a lot to unpack here. First, you should always send a homeowners insurance refund to your servicer. They pay for the policies out of your escrow account at the time they’re taken out. If you don’t send the refund check back, your escrow is always going to be short because they paid for two policies and don’t have the amount that was refunded. In terms of why you didn’t get your full insurance refund back, insurance refunds are prorated. For example, if you were covered for the first three months out of the year, you would get a refund for the remaining nine months, but not for the full premium. The other issue that you’re going to run into is that you need new insurance quickly or your servicer is going to make you take the coverage they buy for you. Homeowners insurance is an important part of protecting the lender’s investment in the home and they need to ensure that if the house is damaged, the house can be restored to its original value. I hope this has at least helped somewhat, but I would speak with your mortgage servicer as soon as possible. They can also go over your escrow account in detail. If you happen to be a Quicken Loans client, you can give us a call at (800) 508-0944.

  7. We got an escrow shortage note, however we have more than enough to cover the taxes & insurance and have enough in our escrow account for a 2 month cushion. Taxes & Insurance were just paid and we still have funds in the Escrow Account.
    So I am wondering why we received a shortage note and now have to pay more per month?

    1. Hi Melissa:

      We’re happy to have someone check on your situation and see what’s going on here to give a further explanation at the very least. If there are corrections that need to be made, we can handle those as well. Thanks for reaching out!

  8. I am curious. My husband and I received a notification that we have a shortage, however, our mortgage payment is decreasing. We are new homeowners and do not understand why our payment would decrease but we are being asked to pay extra. Can someone please explain? Thank you!!!

  9. I apologize in advance. I recieved an error message when I initially attempted to post. You were clear until the last example and your replies to comments. You made the distinction between escrow shortage and escrow deficiency. Then in your example, you provided an example of a deficiency and termed it a shortage. I have a positive amount in my current escrow account. My analysis was just completed and I have an escrow shortage of $800. My insurance went up by about $600 and taxes by about $100, and I’m guessing they must have put in a $100 buffer just in case. So I have an escrow shortage, not an escrow deficiency, based on your initial explanation, correct?

    1. That’s correct. In your case, it would be a shortage as opposed to a deficiency. I’m sorry about any confusion.

      1. Yes we received a notice of shortage on are taxes that went up $3,000 my husband is retired and disabled I’m retired disabled where Homestead we’re only supposed to be raised 3% a year that was the cap so where does this other $600 come from yes the taxes went up I know that but that’s wrong I can’t go from mm the 5000 where new homeowners and it’s very confusing I’ve been to the tax office 3 times what’s the correct paperwork and now it’s all screwed up so now what do I do can somebody please help me this is ridiculous if I’m kept it only 3% that they can raise me why was I hit with a $3,000 up in my escrow this is BS I guess I should say welcome to PSL

        1. Hi Bebe:

          I’m going to get this to our Client Relations team. At the very least, we should be able to provide some explanation of what’s happening.

  10. What happens when the wrong tax bill was used for the calculation of escrow and closing costs?? The annual real estate/school tax bill had been $4170 for the past 2 years. The 2018-2019 bill came out 1 month prior to my settlement and it was due the end of the same month. The title company Claimed it is be an interim tax bill due to a reassessment…. but the bill was the annual tax bill was generated before I even put a bid in on the house and the reassessment was done 2017 as the land with 4 homes on it was made into ”condominiums” assigning a parcel and tax ID to each parcel.
    The first time it was brought to my attention was a December 2018 late notice, because I did mot own the house when the original was mailed beginning of July 2018. The notice stated there was going to be a lien put in The property . I sent it to mortgage company who sent it to the title company. Title company claimed it was an interim bill but the assessment office says there is no interim its the normal yearly tax Updated 2 tax seasons ago.
    So… the Mortgage Company paid the bill (2/19) which included late fees and collection fees. Now because my escrow is negative yhe mortgage gave me these options:
    1. Make a one time Payment $4219
    2. My mortgage goes up starting next month to $1840 instead of $1442 – month for 12 months.
    Doesnt the title company share in any responsibility for theor neglicence considering thats their role in this process?
    The information they provided for taxes escrow/closing was superceded in 2017. New information was available for 2 tax seasons, the latest being distributed just a month before settlement making their claim of it being an interim bill senseless.
    I am at a loss of what to do. Any advice would be greatly appreciated.

    1. Hi S:

      I see that you appear to be working with us on a possible separate purchase loan, so I’m going to have someone reach out and see if there’s anything we can do to give you some advice on this situation. Thank you for reaching out!

  11. My escrow has had a shortage of $2400 the last 2 years. I understand that our property taxes went up by $300 in 2018 and $900 in 2018 but the math just does not add up for me. The payment has been stable because our taxes have been stable until the last 2 years. I really feel there is an error with the bank. The mortgage was transferred to another bank about 2 years ago.

    1. Hi Paul:

      You can always ask your loan servicer for an accounting of how they came to that figure. While the tax increases themselves total to $1,200, there’s often a lag time between when your new tax rate becomes effective and when your escrow account is analyzed for changes in property taxes and homeowners insurance. This typically happens once a year and servicers do them at the same time for all the residents in a particular state. Assuming there is a lag in their timing, which would not be unusual because different counties send tax bills at different times, when the shortage is discovered, you have two options: pay the whole thing off at once pay it off over the next year in your monthly payment plus the effective increase in the taxes going forward. Hope this helps!

  12. i apply for senior freeze every year,this year the county goofed up and my taxes jumped up ,well went to cty and told them and they did a certificate of error and really lowered the tax to wear it should be..which is great..all this time I informed my bank of what was going on,and not to pay the original bill that was sent them which is due 8-1-2018.They said okay we will work with you and let us know what the new bill will be when you get the cert of error..low and behold got a hold of the bank and they said well we already paid the original amount.and of course i was quite upset,all that transpiring with the bank fell on deaf ears.now i will be getting a refund from the cty for overpayment of taxes,what do i do to rectify this at the bank so my escrow payment don’t go sky high..any help would be great.

    1. Hi Elaine:

      You need to ask your mortgage servicer, the bank, to please reanalyze your escrow. Typically, this is only done once a year. However, you do have the ability to request a reanalysis. When they do the reanalysis and it shows what your taxes actually are, your escrow payment should go back down.

  13. To me it makes no sense to put monies aside for a short escrow, and then pay up front a lump sum, just to keep your mortgage payments the same as they were. That means even in a non-shortage year, you are still paying (saving instead of using your cash).

    Think about it… You are saving nothing really because you will pay it anyway, it is only a matter of when. Why would I pay an overage lump sum now when I could pay over 12 months zero interest?

    Even if I did save up in anticipation of a shortage, I could pay the extra amount monthly from my own savings, and be making interest on whatever I have left over to pay.

    It only goes to prove the saying that only death and taxes are certain.

    1. It’s true that you don’t pay extra for going month-to-month with your shortage payments. It’s really whatever works.

  14. I’ve sold my inherited house and am using the money to pay off the mortgage on our permanent residence. My husband says we are having to pay all these fees including an escrow shortage which doesn’t make sense to me. This is not my first time selling a home and the escrow balance has always been refunded. Why now are we being charged for a shortage and will that eventually be refunded?

    1. Hi Kathy:

      In the event that your property taxes and homeowners insurance were paid by your mortgage servicer for the year prior to the pay off of your mortgage, it’s possible that your homeowners insurance premiums or property taxes or both increased causing a shortage in the account. Your servicer would have gone ahead and paid the money in advance anyway, because these things have to be paid on the due date. You would have to pay back any existing shortage in the account. That would be how something like this would happen. Hope this helps!

  15. This article was well written. My question is, once the shortfall has been paid, shouldn’t the mortgage payment revert back to where it was, or at least relatively close? Our PITI payments are 1150 a month (PI is 925; TI was 225). Our credit union dropped the ball by NOT giving us an escrow analysis for the entire 8.5 years of our loan, so no increase ever came & we were novice house owners, so we didn’t know to expect any increases. Now we come to find we owe $170 more per month for the life of the loan — this is quite a chunk for us (one income family, condo living on a tight budget). I can understand why we’d owe $170 more until the deficit has been paid, but why would it remain $170/mo more for the life of the loan? That’s $2,040 more per year for another 20 years and I know property taxes and homeowners insurance doesn’t increase by that much every year in our modest circumstances (small condo). Please help! Thanks!

    1. Hi Mary:

      An escrow analysis should definitely at least be done once a year. It does sound like they really dropped the ball, but I guess there’s no helping it at this point.

      When you have a shortage, your payments are higher to both account for the amount of money that’s owed because of the shortage as well as what the new higher tax rate currently is. Once you pay off the shortage, you’re still paying at the higher tax rate because they don’t want you to have to pay off a shortage again next year, so if your taxes go up, your payment is never going down to the original amount. We’re also at a point in time where property values appear to be continuously increasing every year. The housing market does go in cycles, but there’s currently a shortage of inventory available on the market and it causes prices to go up. They’ll come back down, but no one can predict when that might happen. There’s also a trade off to values being lower because your equity is in part tied to the value of your home.

      The only good advice I can really give you is to make sure that you’re claiming every possible property tax exemption you can get and qualify for. That would help keep the tax bill down.


  16. hello. been a home owner since 2014. 30 yr , fixed rate “conventional mortgage”. i bought when rates were rock bottom and purchased well below what i could afford ( for fear of another market crash). most people would die to have my payments, please dont take this a complaint im simply trying to understand my CU’s math. ive received my 1st shortage notice. my CU says the federal law for the lowest balance of my escrow should not exceed $300.22. i only pay taxes once per year per my city law that states if winter taxes do not exceed $1,500 then both taxes are combined to one summer bill. i had one month right after my summer taxes that i still had $320.00 left in my escrow. i now have a shortage of $25.46. is the ideal status of an escrow to be the closest to $0 ( or federal law lowest) after paying all bills? i thought you always wanted to have a balance in escrow? if i had more wouldnt that give me a refund? ive paid my shortage in full. however next month my payment will still increase $4.11 until 2/19. my CU has projected my payments out to 12/19 and my payment will dive back down in 3/19 to lower than what my payment is now. is there a way to request a the higher payment to continue on that way when it dives back down i wont have another shortage notice in 2020?

    1. Good morning, Lois:

      I’m not sure if there’s a way they would give you an artificially higher payment. What you can do is make payments directly to your escrow if you want so you can make sure you don’t run into the shortage problem. I can tell you for sure that if you end up with the balance, you do get a refund the next time your escrow is reanalyzed. Hopefully this helps!


  17. I’m a home Owner. It’s my first home and I just got the escrow shortage note. i call them and they told me i have to pay an escrow shortage plus my monthly payment will go up because of taxes increases, but my question is, Why if i paid the escrow shortage full at once, my rent still have to come up?

    1. Your monthly mortgage payment would still go up because it’s accounting for the tax increase permanently so you won’t be short next year unless they increase again. Hope this helps!

  18. is there an advantage to paying off the shortage? I realize the monthly payments would go down but there isn’t any interest on the shortage right?

    1. Hi Cynthia:

      You end up paying off the shortage either way. It’s just a matter of whether you do it all at once or over a period of a year. There’s no interest on the shortage amount. We just divide by 12.


  19. I work for a servicing company and how would you explain to a customer the reason why they have a shortage but nothing increased and what is the easiest way to explain the escrow analysis to a customer?


    1. Cassie:

      If nothing changed from year to year, why on earth would they have a shortage? In terms of explaining escrow analysis, once a year mortgage servicers analyze the amount you’re paying into escrow and make sure that it’s enough to cover obligations like taxes and homeowners insurance. That’s escrow analysis in a nutshell. I wish you luck!


  20. Hi I have a concern hopefully you can advise me on what to do.

    We got our house built a year ago.. On December we received and Escrow Shortage Statement of $28 and now on January, just a month later we received another Escrow Shortage Statement saying that we are short by $4,168 and even if we were to pay in full our mortgage payments will go up by $240 a month. My questions are, why did we receive two statements within a month of each other… could this be a mistake? Is our first house… we are so concern that we won’t be able to make these payments. This is an FHA Insured loan..

    Thank you so much in advance..

    1. Hi Sandra:

      It could be a mistake. I would talk to a tax adviser. The issue you have here is that when you build a new house, it’s not actually assessed by the county for tax purposes until later. You’re given an estimate. If that estimate is too far off, you can make a big difference in your monthly payment. I would start by talking to someone that specializes in taxes and go from there.

      Kevin Graham

    2. HI Sandra,

      I work at a Home Mortgage company and would like to know do you know how often your mortgage servicing service perform an escrow analysis? I know in the state of CA according to the RESPA guidelines we are required to do an escrow analysis only once a year. Also, shop around for your property insurance to save money as well as contact your Tax authority. You may be eligible for any discounts available.

  21. I have an unusual situation that I need help with.
    I had an undiscovered leak in my plumbing that caused
    my water bill to skyrocket—almost ten times normal.
    As a result a $1,500 water bill was attached to my tax bill.
    Immediate advice to everybody is always get leaks checked out
    by a plumber ASAP. If I had done that when I first suspected a leak
    it could have well saved me $1,000 or more.
    But back to my initial question. The water bill was attached
    to my winter tax bill. What will happen to my escrow account?
    What should I do?

    1. Hi William:

      I’m sorry to hear about your water bill. I don’t really have a great answer for you. That’s very unusual. My suggestion would be to start with the water department. Odds are this has nothing to do with your actual taxes, but they did that to get your attention. I would call them and make sure they haven’t placed a lien on your house over the unpaid water bill or done something similar. In terms of what happens with your escrow account, I would call whoever services your mortgage and get whatever insight you can. It could be a one-time assessment which would have nothing to do with your escrow account. You make that arrangement separately with the water department


  22. Hi I purchased my new home in July/2017. I wanted to know can escrow accounts be spreaded out more than 12 months and can it be spreaded up to 60 months

    1. Congrats on your home purchase, Nenea! As to your question, Escrow accounts can be spread into equal payments over a year, but 12 months is the limit. All of your insurance and tax payments that will be made over the next 12 months are added together and then divided by 12. That number is added to your monthly mortgage payment so you only have one payment that you have to make each month. For more information on how escrow is calculated, please read: https://www.quickenloans.com/blog/escrow-answers-common-questions. I hope this helps! -Allison Hendricks

  23. Current payments – Only have hazard insurance not property tax. Insurance tax for 2016-2017 was $1520.00

    Breakdown on escrow analysis
    $419.54 principal and interest
    $70.58 Escrow
    $42.94 shortage

    New payments
    $419.54 principal and interest
    $126.67 Escrow

    Hazard Ins – anticipated amounts due $847.00
    Actual Amounts paid $1520.00
    Difference $ 673.00

    Projected low escrow balance $980.48 minus allowance low escrow balance $253.34 = total (shortage $1,233.82)

    So my question is. Is this shortage from the upcoming year dec 8 ,2017 – dec 8 2018 insurance is due. Also the $253.34 is amount that they collect and hold ?
    Im not sure were did the $1233.82 came from .
    It says shortage $1233.82 which was divided by 12 months = 102.82
    However it says escrow payment of $126.67 which eaquals to $1520.00 for 12 months which is my insurance payments that is due on December 8 ,2017.
    Where does the shortage coming from and why are they collecting both shortage and escrow per month ?

    1. So I’m going to answer the bottom in question first. They would collect the shortage and raise your escrow every month from now on because they don’t want you to end up short again. As to the timeline for when it’s due, it’s likely the shortage problem is something they’re planning for this year because they know what your premiums are. The mortgage company will advance the money until they can get around to reanalyzing your escrow again which typically happens once a year, although if you change insurance policies or started having your property tax escrowed, you can call and try to request having it reanalyzed. Based on the way this is worded, it looks like you have to have at least $253.34 in your escrow account at all times so they can have some money in there to make a payment if they have to. Mortgage investors do require that you have a minimum amount in the account. I hope this helps!

      Kevin Graham

  24. Hi. , I was wondering my mortgage payment went up $433.oo. After a escrow shortage . if I find a lower home owners insurance and incorporate the star discount, with the amount of the shortage change immediately, or will I have to wait another year . lastly can I pay the remaining escrow shortage at anytime or must it be in the mentioned 30 days? Thank you

    1. Hi Rafael:

      The impact of any discounts would be between you and the homeowners’ insurance company. That being said, you can try to request that your escrow be analyzed again once you change insurance. Your escrow is typically analyzed once a year. Some servicers will perform analysis again if you request. In terms of the timeline for paying off the shortage, that may also depend on the policies of the servicer. It’s definitely worth asking the question.

      Kevin Graham

  25. Hello…. Do you know if there is any type of Loan that we would be able to get without having Pay stubs to show income? My husband does not get pay stubs from work, he receives a pay check and cash from job. That’s how we are in our house now, since 2004. Our mortgage company put us in by showing income through our bank statements at that time. We don’t have a principal of paying for the house. After 10 years now things are changing. He still does not receive Pay stubs. Check and cash only. Mortgage was $1756.63….Now it has jumped to $2,649.01. Can’t afford to pay that!!! No principal. Pay buy Interest, which really stinks. Interest Now they want Principal $828.01, Interest $1,058.75, Escrow amount $762.25, Monthly payment $2,649.01… Is there any help out there for us? We did a Loan Modification also. It was approved…But for a higher payment of $2,880.65. I’m going crazy and feeling so sick of this. Don’t know where to turn or what to do. We are behind on 2 payments of now. Please any advice out would be so helpful please? Any Loans to look at from other Mortgage Companies or any assistance out there also. Thank you for your time, Lori

    1. Hi Lori:

      It sounds like you had an interest-only loan. There’s no one I know of that does those any more for this exact reason. No matter what loan you take, eventually you have to start paying back the original balance of the loan and when it switches over in the case of interest-only loans, and causes a real payment shock. Mortgage guidelines have also gotten a lot stricter since 2004. We would definitely need to see actual proof of what he gets paid beyond bank statements. This is most commonly provided through pay stubs, but I’m going to suggest you speak with one of our Home Loan Experts because they may be able to give you other ideas. If you end up not being able to refinance, the next best option may be to try and sell the home and move into something that’s more in line with your current budget, but you should definitely speak with someone to go over all of your options. You can get in touch with us by calling (888) 980-6716.

      Kevin Graham

  26. I received an escrow shortage letter today. I have two options: 1) do nothing and have my monthly bill increase from $1020/mo to $1170/mo or 2) pay the shortage amount of $1278 in cash and only have my monthly bill increase from $1020/mo to $1063/mo. Here’s my question: if I opt to do nothing and pay the increased payment every month, in 12 months considering taxes and insurance stays the same, will my monthly payment go back down?

    1. Assuming the taxes and insurance stayed the same, the payment would go back down to $1063 per month accounting for this year’s increase in taxes. I hope this helps!

      Kevin Graham

  27. My insurance was originally about $1,040 but last year it went up by 350 (due to a claim) but this year I received the famous letter “escrow shortage” by like 700 so my monthly payment increased by about 100. Could the insurance have caused the escrow to go up? or why would I have gotten an increased if my property taxes are the same and my insurance stayed the same as the previous year.
    Thanks any knowledge helps

    1. Hi Jairo:

      It’s possible insurance could’ve caused the escrow to go up. Many insurance companies don’t increase premiums after a claim until you go to renew the insurance. I think that’s the most likely scenario you’re experiencing if your taxes haven’t changed. Hope this helps!

      Kevin Graham

  28. I just got a notice saying my property taxes are going up $4,000. Which is going to make me $4,000 short in my escrow come December when they pay the bill. Should I tell my lender now and get the escrow reassessed or wait for them to send me a notice?

    Also every year they over pay my insurance by $2,000. Then the insurance company sends me a check. It appears the renewal notice has a $6,000 amount on it but the bill has a $4,000 amount on it, due to discounts received. Is this a lender problem or an insurance company problem and can I get them to pay the bill amount not the renewal notice amount?

    1. Hi Amy:

      I would talk to your servicer and see if they can do a reassessment for you. Your servicer may or may not be the same as your lender. However, their contact information will be on the bill.

      As to the insurance part, I would talk to the servicer and see if you need to call the insurance company about that. I guess the short answer is start with whoever you pay your mortgage to and go from there.

      Kevin Graham

  29. Can anyone tell me why our escrow would say we are short when nothing has changed? No increase in taxes or insurance, yet somehow we are $352.00 short. We have had an escrow shortage every year. We have been in our house for 5 1/2 years now. Something needs to give!

    1. Hi Angie:

      The only explanation I can come up with if you’ve been short every year and nothing has changed this year is that you need to cushion in terms of number of months escrow payments in the account per the guidelines of mortgage investors like Fannie Mae, Freddie Mac or FHA.

      Kevin Graham

  30. We got a notice of escrow shortage last month, and got a breakdown of the payments/costs today. It says over the course of the next year, we will pay 6127.32 and the escrow account will spend 6127.36. It says our required low balance is 707.60 and at a point in the year we will be at -1067.48, so our shortage is -1775.08. My question is, since we are paying the amount the bank has to spend on us by the end of the year, why do we have a shortage, and what happens to that extra money since technically the bank isn’t spending it on us?

    1. Hi Chris:

      Mortgage investors like Fannie Mae, Freddie Mac and the FHA require that you have a certain amount of surplus funds in your escrow account to help prevent things like tax foreclosures. Therefore, even if you end up paying the exact amount, the lender needs you to have a safety net. This cushion is kept in your escrow account. Hope this helps!

    1. That is odd. Did you recently buy the property? Sometimes the taxes are estimated. That’s the only thing I can think of. Maybe one of our home loan experts would have more insight. You can get in touch with them by calling (888) 980-6716. Hope this helps!

      Kevin Graham

  31. Hello, I am in the same situation as many other people. I received a tax refund check from my town for 4,979.44. I then received a letter a month later from my mortgage company that there was an escrow shortage I then explained to them I had received a check from the town and it might have been something that was suppose to be given to my mortgage company and not me. I then asked them how much was the shortage for and they said 6,253.84 I questioned them that the check was for 4,979.44 so they said I would still be short and that would be rolled out into my mortgage payment which would make my mortgage go up by around 150.00 I also asked if I paid the rest of the shortage would that keep my mortgage my original payment and they said no??? I’m so confused please help!

    1. It’s plausible that the refund check could go to the mortgage company if it was supposed to go in your escrow account. That being said, even if you paid off the shortage all at once, your mortgage payment would still go up because you have to account for the fact that either your taxes or insurance are higher and they really want to try and avoid having a shortage again because that’s not good for you or the lender. I would also make sure you’re claiming every possible property tax exemption you can.

  32. Hi,

    I received the dreaded escrow account disclosure statement today. I bought my house a year ago. Apparently I “owe” $2,233 and my monthly payments will go up $400 per month. I feel ill thinking about this. My question is – will this happen every year (such a large amount) or does this normally only happen the year after the initial purchase? If my payments are going to increase by $400 a month EVERY YEAR I will be homeless within two years. I do not understand how this can happen without them explaining it to us beforehand. The jargon and legalese is so confusing too I am frankly sick to my stomach of all these unseen fees and surcharges that seem to be never-ending and un-affordable. Please help.

    1. Hi E.R.:

      I can’t guarantee anything because I don’t know what your situation is. However, I can tell you that commonly your escrow is estimated in the first year, so hopefully your payments won’t go up by $400 every year. We’re still in a cycle where property values keep going up right now, so it’s likely that your property taxes might go up with those values. I will tell you that if you’re worried about jargon, legalese and unseen fees, your lender or servicer isn’t doing you any favors. If you want, you can call (888) 980-6716 and we would be happy to go over what you’re being charged for and see whether we can get you in a better situation.

      Kevin Graham

      1. Hi KEVIN-

        I have a similar situation. We purchased our home in a Florida in August of 2016. We filed for HEX (Homestead Exemption) before the due date of March 1st, 2017. However, because it was our first year, the value was assessed and our property taxes increased. We received a statement that our escrow account is short $6,357.50. We can pay the full amount, and our mortgage payment will go up from $2,273.44 to $2,647.42 OR choose to do nothing, and pay a new mortgage balance of $3,177.21. Due to Homestead, our home assessment value cannot increase more than 3% after the 2nd year. So my question is, like E.R., will we have to pay next year another escrow shortage of $6k+? OR could you say that after making the full payment now, of $6,357.50, we can just expect slight possible increases to our mortgage of $2,647.42 but nothing crazy since it’s capped by the 3% HEX?

        Thank you so much!

        1. Hi Gaby:

          in this situation, I’m really going to recommend that you speak with a tax expert. Local laws vary and I want to make sure you get the right advice. That seems like a big difference between the assessment and what your monthly taxable amount might be. I think you need to talk to someone that’s more knowledgeable in taxes.


  33. We had an escrow shortfall that will be paid by May, 2017. Once the escrow shortfall is paid, how do we get the mortgage holder to redo the analysis? I’m being told I have to wait until October! I don’t want to keep paying the extra $700 a month, its a strain on my budget.

    Thank you

    1. Hi Peggy:

      You can try to request that they redo the analysis. The problem that I think you’re going to run into is that you’re paying an extra $700 a month in part to ensure that there is no shortfall next year. It’s important to keep in mind that your escrow costs will be higher than they were before either way. However, maybe not $700 per month higher. I understand your frustration.

      Kevin Graham

  34. Hi

    I purchased a property in February 2016 and my property taxes were around $1200 for the year. I just got a letter from my lender and my payment has gone up more than $400 a month.

    My property taxes went from $1,253.21 to $3,747.21.

    We haven’t done any home improvements or anything.

    How is this possible?


    1. Hi Tristan:

      It’s possible that this could happen. There are a couple of things here. You just bought the property last year. Usually, in the first year, your lender estimates your property taxes because the local taxing authority hasn’t had a chance to reassess your property value yet. Many times, that estimate is lower than what the taxes actually are.

      The other piece of this is that property values are in an upswing. In some areas of the country, this is happening faster than in others. It’s possible your property value has actually gone up quite a bit. This is a good thing because you’re getting equity, but it can be a double-edged sword because your taxes are going to go up.

      In terms of actual advice, the only thing I can tell you is to make sure you’re claiming all the property tax exemptions you can possibly get. You should see a tax professional if you’re unsure what you might qualify for. I hope this at least explains how it could happen.

      Kevin Graham

  35. I have owned my home for 9 years now and refinanced my mortgage about 5 years ago. For the past 5 years since refinancing, I have received an escrow shortage notice every January. I have not been aware of either my insurance or tax assessment during that time going up hardly at all, but yet the shortage amount is always sizable. Before changing mortgage companies, I had never received a shortage notice. I have contacted my mortgage company multiple times regarding this, but never get a satisfactory answer. Any advice?

    Thank you!

    1. Hi Denny:

      I would make sure your mortgage company is the one servicing the loan to begin with. Many mortgage companies sell the servicing rights after your mortgage is originated, so they don’t actually have anything to do with the payment. Make sure you’re contacting the right company. Once you do that, if they can’t give you an answer, I would contact your local taxing authority and homeowners insurance company. It’s a little work, but that’s how you would get to the bottom of it. I hope this helps!


  36. Sorry, I was wrong. There was no increase in our homeowner’s insurance at all. Supposedly property taxes went up.

    1. My best advice if that’s the case of your taxes going up is to make sure that you’re claiming all the property tax deductions you can.

  37. Hello! We have just received a bill stating that we are short almost $5,000! We generally pay $800 per month and have been in our house just a year and a half. Is this normal to need to pay this much for a shortage? I know that our homeowner’s insurance went up about $50 when we renewed in December 2016, but don’t understand how this could happen. If we pay them the lump sum of $5,000, then our payments will be $300 more than what we are paying now. If we spread it out over 12 months we will still be paying almost twice the amount of our mortgage each month, which we can’t afford. Any advice?

  38. At the beginning of 2016 I received an escrow overage check of $350.

    At the beginning of 2017 I received a notice that my mortgage payment was going up $150/month because the mortgage company did not collect enough that it needed to pay out in 2016. My homeowners insurance actually decreased by $5/year and my taxes may have gone up a total of $10 from 2017 to 2016. Why would a company not notify me in 2016 if there was going to be a shortage and does this increase seem extreme?

    1. Hi Stan:

      When you first buy a property a lot of times, the tax payments used to set up your escrow account are estimated and it’s not unheard of for this to happen. Your mortgage company wouldn’t know what your taxes were until the taxes were reassessed after the purchase by the county. It’s possible that it could increase by that amount depending on how much they underestimated your taxes.

      Kevin Graham

  39. There was a shortage for me of $125.50, I have the option to pay that amount up front, but yet my monthly payment still went up about $10. Is this the same as the last example from your article? That I am paying for last year’s shortage and for this year?

    Thank You

    1. Hi Jon:

      That’s exactly what’s happening. You’re paying the shortage from last year and the additional charges for this year.

      Kevin Graham

  40. Hi there,
    We purchased our home in July of 2015. In February 2016, we received an escrow refund check of $1,200 AND our payment went up $90.00 each month. I don’t understand why we would receive a refund and at the same time our payments go up. Can you please explain?

    Thank you

    1. Hi Tara:

      That’s a very good question. One thing that comes to mind is that when you purchase your home, your taxes are usually estimated. Therefore, your mortgage company will have you put extra in the account in order to help you avoid a shortage. When your escrow analysis was completed, they realized you had more money in your account than was necessary for the bill for the previous year. However, your property value was also reassessed by the city at some point and your taxable value went up. Similar changes can happen if you switch insurance policies.

      Kevin Graham

  41. 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

  42. 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

  43. 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.

  44. 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

  45. 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

  46. 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.

  47. 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

  48. 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

  49. 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!

  50. 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

  51. 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

  52. 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

  53. 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

  54. 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

  55. 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

  56. 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?

  57. 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

  58. 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

  59. 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.


  60. 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

  61. 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

  62. 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

  63. 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

  64. 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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