I received a $7000 refund check in the mail from my mortgage company. After investigating, I noticed there was a special deposit in my escrow earlier last year, but I received no documentation to explain its origin. After the escrow analysis, they decided to issue a refund. When I contacted the lender, they were unsure of the deposit’s purpose and are currently investigating. Has anyone experienced something similar, and should I expect to have to return this check? It seems too good to be true.
Put it in a High Yield Savings Account (HYSA) and don’t touch it. It sounds like someone made an error and hasn’t caught it yet.
Check with your insurance company and your county or city tax authorities. They may have refunded a payment for some reason.
Ali said:
Check with your insurance company and your county or city tax authorities. They may have refunded a payment for some reason.
My taxes and insurance are about $5000 combined right now. It would’ve been years of corrections to make sense. I haven’t made any claims and I’ve checked my tax statements, and they were all correct. Both insurance and taxes have been increasing every year, so it’s not like they should owe me anything.
@Colby
I’ve heard of this before! As a former auditor, I’ve seen internal fraud. You did the right thing by contacting the lender. Do not spend the money! Return it to the lender.
You should have received an escrow account analysis before they issued the refund check due to the escrow overage. Can you check what the special deposit is labeled as on the analysis? The fact that the lender didn’t know immediately suggests a loan servicing error. Did they give you a timeline for their investigation? Any deposits into an escrow account should be easy to source.
@Bran
2023 analysis: Indicates your projected low point of $57.43-. Your required reserve balance is $710.82. The difference between the projected low point and required reserve balance is $768.25. This is your shortage. Your escrow shortage has been spread over a 12-month period, which may result in an increase in your payment. 2024 analysis: Indicates your projected low point of $8,236.31. Your required reserve balance is $813.09. The difference between the projected low point and required reserve balance is $7,423.22. This is your escrow surplus amount. The escrow surplus amount in your escrow account is $50.00 or more. The surplus amount will be refunded to you in the form of a check that either (a) is included with this statement or (b) if your loan is current as of the date of the escrow analysis and your refund check is not included with this statement, it will be mailed to you within 30 days. This is really all they’re explaining on there. The deposit was made in January 2024, in between the analysis. Also yes, on my February 2024 statement it shows as a special deposit. They said the investigation would be completed in 5-10 business days.
@Colby
I’ve been in mortgages for decades and was actually a loan servicing manager once, meaning I was personally responsible for the entire escrow account analysis process. I’ve never seen a credit labeled as ‘special’. This is definitely odd.
@Bran
I’m guessing some sort of property tax thing. OP, does your county show property tax payment activity online? If so, that may provide a clue.
Rory said:
@Bran
I’m guessing some sort of property tax thing. OP, does your county show property tax payment activity online? If so, that may provide a clue.
$7K is a huge escrow overage and the servicer should have been able to explain the source of the ‘special’ escrow deposit when OP first contacted them. The escrow analysis done in the fall would show the projected escrow balance for 2025 and there’s no chance even a newly constructed property isn’t fully assessed by then. It’s definitely odd. OP, did you switch insurance providers or, to your knowledge, did anything else having to do with your property taxes or homeowners insurance change during that time period?
@Bran
I’m calling it internal fraud. I saw a manual entry with a Wells business account I was auditing. Miscellaneous deposit with a deposit date from a past date and post date most current date. Deposit and post dates aren’t the same and manually overridden. Employee leaves bank and now untraceable.
@Wren
Or just human error transferring the funds to an incorrect account. I’m not sure what the motivation would be for an internal employee to purposely apply funds to the wrong escrow account. Fraud involves the intention of personal or financial gain, so that wouldn’t apply here because only OP would theoretically benefit. I definitely hope OP posts an update though because I am super curious.
@Bran
I could continue the story but it’s still an internal weakness from just a few years ago. This mysterious deposit happened in the early 90’s and I still saw it happening in 2019. Weird right?? I will say, every deposit must have an equal credit to equal 0. The debit doesn’t necessarily mean the same account was credited for a 0 impact. No out of balance exists at this point.
DO NOT SPEND IT! Once your taxes get recalculated, you might receive a bill close to that amount.
This overage amount seems very high compared to your usual yearly escrow amount. Put it into a separate account like an American Express High Yield Savings Account and let it sit for another year or so. If the error isn’t found, consider including it with your general retirement or investment accounts. Also, you might want to check with an attorney in your state because, regardless of an error, you may be entitled to keep this after a certain period of time even if the lender does come back for the funds.
It’s important to differentiate between a lender and a servicer, although in this case, they are one and the same.
Dana said:
It’s important to differentiate between a lender and a servicer, although in this case, they are one and the same.
Correct, in this instance, the lender and the servicer are the same entity.