An escrow account is an account tied to your mortgage loan that you fund as part of your total monthly mortgage payment. In addition to your required principal and interest payment, an amount about 1⁄12 of your scheduled taxes and property insurance is paid into the escrow account. These funds are used to ensure payment of your property tax and/or homeowner’s insurance. Private mortgage insurance and flood insurance may also be paid from your escrow account. Let's take a look at some common questions regarding escrow accounts.
Do I need to provide my tax and insurance bills when they come due?
As long as The Bank of Missouri is listed as the tax payee/insurance mortgagee for your loan, we should be receiving these bills from the local tax authority and/or from your insurance agent. However, there are instances where mail is lost, mortgagee information is removed, etc. If you receive a notice that your property taxes or insurance has not been paid, please reach out to the Loan Servicing Department at The Bank of Missouri so we can research and resolve the issue.
Do I need to inform the Loan Servicing Department of any changes I make regarding my property taxes or insurance premiums?
Yes. Although The Bank of Missouri is paying these bills for you when they come due, we may not know about events affecting these payments, such as a change to your insurance agent or policy or an alteration to your tax parcel. Please inform the Loan Servicing Department about any changes in your property taxes and insurance. We may ask for documentation regarding any change, such as a new declarations page. Failing to do so can result in a lack of insurance coverage to protect yourself (your equity) in the event of property loss or delinquent tax bills.
Why are you collecting funds at closing when I paid my taxes and insurance premiums at closing?
The payments you made at closing were for an initial escrow deposit that runs in correlation to the time of year your loan closes and when the next tax/insurance bills are due. Those funds may have also been for tax or insurance payments that were due at the time of closing. The funds you put into the escrow account with your monthly principal and interest payment are for escrow items to be paid in the future, such as property taxes, insurance premiums, private mortgage insurance or flood insurance, if applicable.
How often is my escrow account analyzed to determine a new monthly payment amount?
Your escrow account is analyzed at least once per year at your determined escrow analysis date.
What is a shortage?
A shortage occurs when your escrow account lacks the necessary funds to pay the property tax and/or insurance premiums. This can occur if the property taxes or insurance premiums for the previous 12 month period were more than expected, or if they are estimated to go up within the next 12 month period.
How can I make up my shortage?
You can pay the shortage in full prior to the new payment date change, or your payment will have the shortage amount added to your payment in equal payments over the next 12 months.
What is an overage?
An overage occurs when your annual escrow analysis determines that there are more funds in your escrow account than are needed to pay your insurance and property tax obligations for the year. This can occur if the property taxes or insurance premiums for the previous 12 month period were less than expected, or if they are estimated to go down within the next 12 month period. If an overage has been determined and that amount is over $50 and your mortgage payments are current, you will be issued a surplus check from your escrow account. If the amount falls below $50, the amount will be credited towards your payment amount and lower your payment accordingly.
How is my new escrow payment amount determined?
We estimate the amount of your taxes and insurance premiums for the following 12 months. This determination is based upon your loan closing documents, as well as information obtained from the taxing authority and insurance company.
The total amount needed to pay your property tax and/or insurance premium(s) is divided by 12 and added to your monthly mortgage payment.
Your escrow account is then analyzed to determine if it will have a sufficient balance for the next 12 month period to pay the bills due and maintain a two-month cushion. If it will not, your escrow payments may increase to include the calculated shortage and/or deficiency.
If you have any questions or concerns regarding your escrow account, give us a call at 888-547-6541.
You can also reach us by mail.
The Bank of Missouri
Attn: Loan Servicing Department
Post Office Box 309
Perryville, MO 63775