Answers to common questions related to escrow accounts, real estate taxes and property insurance.
I escrow for real estate taxes. Why do I still get a bill?
Municipalities send real estate tax bills to property owners only, and Cape Cod 5 does not need copies of your tax bills to pay them on your behalf. When you get your real estate tax bill, you should review it to confirm that it’s your regular quarterly or semi-annual bill and simply retain it for your records. If you receive a Supplemental bill or Special Assessment, you must pay it yourself even if we are escrowing to cover standard quarterly or semi-annual real estate tax amounts.
What is a Supplemental tax bill?
A Supplemental tax bill may be issued following an increase or decrease to your property’s value assessment. It is likely to be separate from regular tax bills and carry an irregular due date.
What is a Special Assessment?
A Special Assessment tax bill is typically issued due to a public improvement betterment such as town water or sewer installation, neighborhood sidewalk, private to public road, etc.
What is an annual escrow analysis?
We analyze the amount of money in your escrow account once a year to determine if there is enough to pay for next year’s expected tax and/or insurance payments.
When do you perform the annual escrow analysis?
Cape Cod 5 performs an annual escrow analysis on or about the anniversary date of your loan closing and mails a disclosure/projection letter to you that shows what we expect in the next 12 month period and what actually occurred in the previous 12 month period. A minimum of 30 days must pass before any changes to your monthly payment will go into effect.
What are the most common reasons for my escrow payment change?
The most common reasons are changes to the amount of your real estate property taxes and/or property insurance premiums from year to year.
What is the required minimum balance?
The required minimum balance is the smallest sum of money you can have in your escrow account at any time during the year. The required minimum balance (also known as a cushion) may include up to two months of escrow payments minus mortgage insurance, and is intended to cover potential increases to your real estate taxes and property insurance.
What is an escrow overage?
An escrow overage occurs when our analysis shows that you have more money in your escrow account than the required minimum balance. All escrow overages greater than $50 will be refunded via check if your account is current as of the date of the escrow analysis.
What is an escrow shortage?
An escrow shortage occurs when our analysis shows there’s not enough money in your account to meet the required minimum balance. Based upon the analysis computation, we adjust your monthly payment to make up the shortage over a 12 month period. You also have the option of satisfying the shortage by making a one-time payment. This one-time payment must be made at least 15 days before the due date and include a request to re-analyze your escrow payment to adjust the monthly amount.
Which month will the payment adjustment begin with?
The first scheduled payment due date following a minimum 30 day period from the date of the escrow analysis.
Who should I contact if my monthly escrow payment increased?
Your escrow payment would most likely increase because of changes to your real estate taxes or property insurance premium(s). We recommend that you contact your local tax authority or insurance agent with questions about your bills.
What do I need to do if my payment amount changed, and I have automated payments set up?
If you make recurring payments where Cape Cod 5 drafts your payments using the Cape Cod 5 Automatic Payment form, the payment amount will automatically update based on your most recent escrow analysis statement. If you make recurring payments through External Transfer or Bill Pay, the payment amount will not update automatically and you will need to update the amount of any scheduled payments. For payments made through another institution, please follow their process for changing your payment amount.
My loan is not escrowed. What are my obligations regarding my real estate tax and property insurance(s) bill?
It is your responsibility to pay your real estate taxes and insurance premiums by their due date.
What happens if I do not pay my real estate taxes on time on a non-escrowed loan?
If your taxes remain unpaid and become delinquent, your loan will be in default per your mortgage loan agreement. At that point, the Bank reserves the right to pay the outstanding amount and set up a tax escrow account on your loan. If Cape Cod 5 establishes an escrow account to pay your delinquent real estate taxes, escrow will become permanent for paying future bills. This will cause an increase in your total monthly mortgage payment going forward.
My monthly payment went up. How can I tell if it’s because my real estate taxes and/or property insurance increased?