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Refunds or savings may be ahead for 30 million homeowners whose mortgage payments include money for property taxes and insurance.
The Deparment of Housing and Urban Development is issuing new mortgage escrow rules Wednesday.
The changes mean that savings or refunds for escrow overcharges could average $250 a household, says Grant Mydland of the American Homeowners Association.
Many mortgage payments include money earmarked for an escrow account, which the lender uses to pay property taxes and homeowners' insurance premiums. And some charge for the service.
The new rules say lenders:
- Can't accumulate a cushion of more than two months' payments. Some require four or five-month cushions.
- Can set up only one escrow account per home loan. Some use separate accounts for taxes and insurance, on which they earn interest.
- Must send homeowners a statement early in the year that projects how much escrow payments might rise. A second, at year end, will compare actual and projected payments.
Lenders have three years to comply on old mortgages.
"We'll adjust," says Glen Gimble of America's Community Bankers. But some lenders might "rethink whether to even offer escrow services."
Attorneys general from 26 states have won cases or settlements against lenders for overbilling escrow customers.
Only 14 states require that money in an escrow earn interest for the homeowner.
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