RESPA Homeowner Alert

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Warning! Some lenders are late in paying homeowners' property taxes from escrow accounts and they are passing the late fees on to the homeowners instead of absorbing the costs of their own mistakes.

What you can do

Review your Escrow Account Statement:

Did your lender or loan servicer:

• forget to pay your taxes?
• pay your taxes late?
• charge the late fees/penalties to your escrow account?

If so, complain directly to your lender or loan servicer and ask for a refund of the late fees.

Some questions and answers:

Question 1: What's the law require?

Answer: Section 6(g) of RESPA requires loan servicers to pay taxes, insurance and other escrow account charges on time to avoid late fees or penalties. (Section 6(g) is found at: 12 U.S.C. 2605(g).) HUD interprets Section 6 (g) of RESPA to require lenders to pay borrowers' tax bills on time so long as the homeowners were current in their mortgage payments. If the lender pays the tax bill late and the homeowner is current in making the mortgage payment, HUD would consider the lender responsible for any penalty or late charge, barring any justifiable excuse.

Question 2: If I paid my mortgage on time, why was my lender late in making my tax payment?

Answer: Mistakes happen for any number of reasons. Most late payments are due to computer glitches, or may occur when loans are being transferred from one servicer to another or when lenders merge. Most lenders do not routinely pay tax bills late. Many lenders get a computer "tape" from the taxing authority for all borrowers who owe taxes in that jurisdiction and sometimes names and bills are left off the tape by mistake. Some lenders expect homeowners to forward the tax bills and some homeowners may not do so timely.

Question 3: How can I check to see that I haven't been charged for my lender's mistake?

Answer: RESPA requires your lender to send you an Annual Escrow Account Statement. Compare your Annual Escrow Account Statement with your tax bill. If you did not receive a bill from your county, city, or other taxing authority, you can ask the taxing authority what you owed in taxes for the time in question. You will need to check both to make sure that the amount the lender paid from your escrow account matches your tax bill. If the amount the lender paid from your escrow account is more than your tax bill, that difference may be a penalty or late fee.

Question 4: What can I do to get a refund?

Answer: In a written letter (not a phone call), ask your lender for an explanation and refund if the lender was at fault for paying the tax bill late. Your written letter should be labeled a "qualified written request under Section 6 of RESPA." You may follow the Sample Complaint to Lender format for complaints.

Please send HUD a copy of your "qualified written request." That way we can better monitor lenders for compliance with this law. Our address is:

Office of RESPA and Interstate Land Sales
Office of Housing, Room 9154
US Department of Housing and Urban Development
451 Seventh Street, SW
Washington, DC 20410

Question 5: What can HUD do to help?

Answer: HUD has started a broad review of the practices of the largest loan servicers in the country. Unfortunately, HUD may not be able to get involved in every dispute that occurs between a homeowner and a loan servicer over escrow charges. By following these instructions, homeowners can help themselves get refunds directly from their lenders. By sending copies of your complaints to HUD, you will help us identify the worst offenders so that we may take appropriate action against companies that are doing the greatest harm.