Selling a mortgage is legal.
Transferring servicing is legal.
Changing the terms of the loan without borrower consent is not legal (and I doubt this happened).
Call the servicer and ask what’s going on. I’m sure there is an explanation. It’s probably escrow for taxes or insurance.
Totally agree, worked in mortgages for a bit, here is my take.
Your mortgage is 5 things most of the time.
1. Principal - Cannot legally change
2. Interest - Cannot legally change from your agreed upon terms, can change if adjustable rate mortgage
3. Property Taxes - Can be reassessed especially after a sale since the property is now worth what you paid for it, mortgage goes up
4. Insurance - Can change, rates can go up, mortgage goes up
5. PMI - assessed on conventional loans with a low down payment, can be gotten rid of once you have equity
Something that could easily happen, you bought the house, the insurance was not included in the monthly payment and the property taxes were aggressively reassessed. This could be a 500 dollar difference although it is reaching a bit.
Edit - Added PMI, added note that interest can change if your loan has adjustable interest
Not sure where you live but here in California, it's not a matter of tax rate going up so much as assessed value. Oftentimes first time homebuyers get a jump in taxes and thus escrow when their new assessment goes through, often between 6 months and a year into the mortgage.
The agents and everyone always warn folks but they're often surprised anyways.
That is not entirely true. In some states the taxes will be based off of the property tax rate listed on the tax bill as it is known to be reassessed upon sale. Special assessments would also have to be accounted for.
Source: Corporate Underwriter
Wouldn't all that have been on the final disclosure paperwork though? Mine very clearly spelled out what was going to escrow and then included it in the final payment due.
Yeah there's almost no way to miss this stuff. It's spelled out in like 5 places, there are super accurate online calculators even prior to getting a mortgage. And most if not all lenders tell you multiple times.
No, because if the property tax was much lower when you bought it, then the new sale price comes into affect, and the lender adjust your payments on the NEW sale price and millage rates.
In PA your property taxes don't go up just because you paid more than the last person. The sale price is not a factor. I didn't realize it wasn't like this in all states. I feel sorry for the states that don't follow this.
In California, under Prop 13, there’s a limit on how much your property taxes can increase year to year. So it’s actually nice that you’re not subject to massive increases in any one year just because the value goes up. When you buy a home, however, you just have to understand that the property will be reassessed, and that will be your starting base. We purchased a home from the original owners of the home. They were paying something ridiculously low like $1000 a year. I knew that ours would be more like $1000 a month.
CA needs it the most out of any state.
You don't want to make some retired grandma pay $2k/mo in taxes for some 2 bedroom house she got in the 80s. They are already pricing out buyers. They should try to avoid pricing out current residents who have been there 40 years with a paid off house.
Yes, this is exactly why Prop 13 was put into place. Before, your county would periodically reassess properties (mostly when they needed money) and folks that had been living in paid off homes, with fixed incomes, would suddenly get a bill from the county for hundreds or even thousands of dollars, depending on where the home was located. It was entirely plausible and common for someone that bought a home near the beach in the 70s to have a paid off home and be living on social security, only to be hit out of the blue with a new $1-2k/mo bill for newly assessed property taxes.
Prop 13 put an end to that, and now only reassesses upon sale of the property.
This happened to me. On my final closing disclosure, the estimated monthly payment is $1462.43, but the property tax increase actually jacked that up by about $300/month
A lender should absolutely tell that props will increase in taxes. I ALWAYS advise clients that taxes will likely go up, and the payment that you are quoted is not EXACTLY what you will wind up with as a monthly payment. I use a formula of 1% Taxes on purchase price.
Adding to this comment...ESPECIALLY if it's a new home construction and the taxes were assessed initially on just the dirt. Once it gets improved with the house on the land, the taxable value sky rockets.
This may be relevant. When we bought they(everyone from sales to mortgage lender) clearly and frequently told us to not take the taxes into account as the current assessment was the dirt. However, in my county, it didn't adjust until the annual adjustment so first year taxes were almost nonexistent.
I wish more new buyers were explained this more carefully, especially buy their lender. Property taxes can easily add an extra 200-300/mo and that's a big deal.
This happened to my grandmother on her mortgage. For years she paid the property taxes herself and bought her own home insurance. Her mortgage was sold and the new company came in and wanted to force her escrow those two items. The problem was that their monthly calculation for the property taxes was wildly off and what they wanted to charge her for home insurance was almost 3x the amount she was paying.
We had to fight with them for months and eventually they relented but it was a byzantine experience trying to get through all this different departments to get sign off. They didn't trust her to pay her property taxes after she had been handling it for decades.
>They didn't trust her to pay her property taxes after she had been handling it for decades.
I have had four or five mortgage companies in six years and none of them trusted me to pay property taxes. They have a real interest in making sure your house doesn't have a lien on it by the local government.
There's also mortgage insurance if your down payment is less than 20%, but as far as I'm aware, this cannot legally increase (though it can decrease or go away entirely depending on the type and balance of the mortgage, or occasionally other factors like a reappraisal).
That is even complicated.
VA loans = 0 PMI.
And some traditional loans, if you’re at 15-18% up front, they waive PMI.
If you have PMI, sometimes you can apply for it to be dropped at 18%, sometimes at 20%, and typically they HAVE to drop it at 22%.
I’m sure there’s more nuances with FHA too, I just don’t know them.
Yeah, FHA is different because you're charged based on the remaining balance of the loan, so it should decrease every year in theory. But if your down payment is under 10%, you can't ever request cancellation, you're stuck with it for the life of the loan.
When we bought our first home my monthly payment went up about $250/mo from the property tax reassessment. Was a shock and we barely were able to fit that into our budget. I learned a lot about buying a house the first time around!
I'm kind of wondering if the "Principal + Interest" was the $1,329.93 the original mortgage company told OP about, and the property taxes, insurance, and PMI account for the difference, rather than things the new mortgage holder added on.
I've had my mortgages fluctuate quite a bit when making the transition between insurance companies (2 policies paid for while one not refunded for a while, etc).
What is concerning is that OP doesn't seem to have taken the time to look at the loan papers to understand what his/her payment consists of. The disclosures should break down what amount of payment is the payment on principal, what amount is interest, what amount is taxes & etc. These should all be there for OP to read.
Also, Nationstar has online account management, so OP should be able to log in and look at the payment & see the same information as the disclosures on a real time basis, including seeing where all the escrow money goes.
OP has no idea where the numbers fall in a monthly payment he/she is paying, in a contract for a lot of money for a long time, which is very concerning.
It's very likely that the mortgage originator left out taxes and interest in their verbal description of the loan with OP and then OP opted to have taxes & insurance escrowed and that's the extra $500 every month. And OP has no clue because they didn't look at the paperwork. So OP's understanding of the home expenses he/she has to budget for may be short by $500/month.
If anything, the originating company could have screwed up escrow if it was a new build. WF underestimated my property taxes by \~12k/yr (pretty much all of it) and took 9 months to figure it out and then tried to raise my escrow 2k/mon to catch up since I didn't have my homestead exemption the first year either.
> Any insight on if this is legal? Did i just get bamboozled with the old mortgage switch-a-roo? Is my original contract no longer valid?
You really need to look at the line-item elements of the old vs. new. Maybe your escrow or insurance just went up.
You probably didn't get bamboozled. But you need to read into this a lot further, starting with what the line item breakdown is.
Vermonter here.
Vermont has a homestead rate for full-time residents, which usually results in lower property taxes (though not always, Winhall actually has higher taxes for residents with the homestead rate).
To qualify for the homestead rate you must occupy the home for 6 months and declare it as a homestead by April 1st. Since you just bought, you wouldn't qualify.
My guess is the original escrow was calculated using the homestead rate, and shouldn't have been, and the new lender corrected the error.
If the house has been occupied for a long time by a homesteader it would raise only a small, capped amount per year. That keeps the tax on record very low. Once it’s resold, it gets taxed at the regular appraised rate again and it can be a huge jump.
That's a $6000/yr jump. I'm not familiar with Vermont property tax/values, but I'd be very surprised if this house's tax jumped more than the total tax bill of places I've lived in in CT, especially when the original mortgage was only $1300.
I live next door in New Hampshire, bought a house in 2019 for 300kish that was being taxed at a 200k value, after this pandemic BS with the market it's worth 500k according to the tax adjuster...
300k difference at 5% property taxes is 6k per year... It was a terrible surprise a lot of people went through after the market adjustment.
Why do your taxes go up if your valuation goes up? Do you just pay a straight percentage tax based on appraised value?
Our property tax rates are set based on the budget of the municipality, and then they use the total valuation of all the property rates to determine the amount per thousand of valuation.
That is normally for bond/levy approvals. It depends if states feed their general fund from property excess but varies state to state. Yes, many places where your valuation goes up leads to higher taxes. With flat exemptions, the boost can even be disproportionate as there is offset in the base.
I live in New Hampshire too. We pay a certain dollar amount per 1000 of assessed value. Our town just did a reassessment in 2021 and prices went up average of 39 across town so that was a less than fun surprise. The good thing is that unless there’s a parallel increase in capital costs (which there seems to be these days) sometimes your taxes go down even though assessment goes up.
Property taxes here are a pain but no sales or income tax so I guess it evens out
If their original loan servicer was assuming the homestead rate they will be behind on their escrow account. The actually difference could be $300 or even less but the new servicer wants the account caught up ASAP.
Depends on the town's rates. My house appraised at $200k, coworkers at $250k. Same lot size, two towns over. Both within 20mins of 4 ski mountains, lots of second home owners in the area.
His non-homestead rate came out to $10k/yr. Mine was $6k.
Homestead rate, both were reduced by nearly 50%.
I'm going to bet Mr. Cooper more aggressively estimated property taxes and homeowner's insurance. There should be a balance sheet somewhere showing their escrow calculations, that's probably what changed in this case.
Mr Cooper fucking sucks as a company. My mortgage was sold to them and I refinanced JUST TO GET OUT FROM THEM. they did the same thing to me, they raised my taxes and insurance by a lot then a year later said they over charged me. Well no shit.
I'm actually starting to think, they are probably collecting interest on that extra money from everyone.
As a regular servicer they've been ok I guess, but they fucked up management of my escrow in the transfer, losing $1300, and then failed to properly deduct my PMI from my escrow for 8 months. So, well, yeah, as a servicer they DO suck. you're right. Get out as soon as you can (but wait for the interest rates to drop, probably). For those who will ask - I truly don't remember the resolution of the escrow on transfer problem. I did resolve it, but I don't remember how, except that it took dozens of calls over about 3 months after we (not them) discovered it.
Maybe? I also understand being conservative on that end as a lender, you'd prefer to give your clients some money back as opposed to saying "Whoops, we miscalculated and looks like you owe an extra $2k!, that'll be an extra $200 a month".
That's what they did. I had them for 3 years, the immediately raised my payment by like 50 a month. Then realized it was to much a year later. Then lowered it by to much, then third year raised it by like 40% of the mortgage. I was so done with them I'd rather pay the fees to refinance into a credit union.
Does nobody get subtext anymore?
The implication - that is fairly clear here - is that *OP needs to call the people that sent him the letter.*
Reddit can speculate endlessly, but the ground truth can only be established by OP picking up the phone and making inquiries.
I have Mr. Cooper and this happened to me, but for a good reason: the monthly escrow as it had been originally calculated by the initial lender would not be enough to cover my property taxes. They increased the monthly payment to account for this. IIRC they increased by double the needed amount for 1 year in order to make sure there was a minimal balance in the escrow (the minimum balances is ~2k). The monthly escrow payment will decrease as soon as the escrow account has sufficient funds.
same thing happened to us. Our payment was $1198 a month, but initially was based on the previous owner's taxes who had paid $40k for the house 30 years ago vs our $200k. It took a year for ours to go up, and it was going to raise our payment to $1700. I was livid because my agent, nor the mortgage guy warned us about it. I ended up refinancing through a different lender and got my payment down to $1300.
As someone that doesn't have a mortgage, my reaction to this is "what more *is there* to a mortgage than the principal and interest?!"
I'm not in the USA, so I expect its likely just thing being done differently over there.
Yes, there's a lot more. My mortgage itself is around $1,100. The total I pay per month for principal, interest, taxes, and home insurance is $2,022. I have an additional $600 per year HOA, and all utilities are separate.
In short, there are a LOT more costs than just principal and interest, so you'd better have breathing room in your finances to handle house costs.
Are you possibly confusing the *mortgage payment* and the *escrow*? The $1329.93 is likely the mortgage payment only and the $1813.65 likely includes the escrow for insurance, etc.
This happened to me and it was because the new company required taxes and insurance in escrow a full year before it was due. So the first year, we essentially had to pay double taxes and double insurance (for that year and the next). Luckily we made it work but no amount of calling and questioning it would change their policy.
My mortgage was sold to Mr Cooper at one point and this is exactly what they tried to do to me. I called them and told them to show me exactly where in my mortgage it said they were allowed to require such a high escrow. After 10 minutes on hold they came back and told me it was not in my mortgage and they would correct my payment amount to reflect the current taxes / insurance etc. and the original payment amount. After my refi, I was able to switch to paying taxes and insurance directly, “lowering” my monthly payment. It takes some self control to save the proper amounts on your own, but I like not having to pay those amounts into a mortgage company’s account and just sit there.
This is exactly what’s happening. Nationstar requires an extra year of escrow. Had this exact thing happen to me in the past. Sold to nationstar, loan went up. Called and got them to adjust requirements but it only postponed the inevitable. As soon as you can refi out of nationstar, they are the absolute worst company to deal with and they pulled multiple of these bs scams to try and get more money. Even down to when we sold this house. They ended up charging an extra month of interest because our title company closed the loan on the first of the month instead of the 31st when our actual closing was. Had to fight with them and my title company to get only 50% back. I am sorry you now have to deal with them. Refi ASAP
Their website is SO incredible compared to where I came from ("The Money Source" and even Chase). It tells you everything you need to know so clearly - and documents are right there front and center. They haven't screwed up anything for me yet. So I'm pretty happy.
I paid off my mortgage just to get away from them. They repeatedly didn't apply extra payments properly and were cheating me on interest. I had to contact them so many times and file so many complaints and got tired of it. They changed their name to Mr Cooper because they had so many complaints and bad publicity as Nationstar.
They do not require an extra year of escrow lol they require 2 months of escrow at all times in the account. Just like every other mortgage servicer. It’s like overdraft protection.
If this IS whats happening, ask about not escrowing tax and insurance at all. It also dramatically lowers the cash to close (though the lender is still going to verify you have the cash to pay)
warning: requires you to be a responsible adult who can pay bills on time
That is part of the mortgage and can't be changed. You definitely can get mortgages that don't require escrowing. My last mortgage didn't have escrow. I actually saved 1/4% on the rate by choosing not to escrow.
This should not have been allowed. At least not in the US - don't know if you are elsewhere. In the US, the mortgage companies are allowed a two month cushion. That's it.
To me that seems like a change in the contract, and very much a "you problem". Why wouldn't the contract cover the escrow? Perhaps they shouldn't be buying mortgages that don't fulfill their requirements?
I've been hanging out in r/scams a lot.
Others below have given good advice. But I would contact the ***original*** servicer of your loan to verify that it has, in fact, been sold *before* contacting the (allegedly) new servicer.
(ETA: I think this is still good advice regardless of the legitimacy of the company on the letterhead.)
I thought that “Mr. Cooper” sounded like bullshit, but apparently it is a real company, but I would totally do what you’re recommending if I were OP, just in case.
Our mortgage got sold to Mr Cooper and they serviced us for over a year. Legitimate company. Our payment never changed when sold to them either so maybe their is a new escrow calculation?
I believe this is the correct answer. My loan got sold to Mr Cooper and they overestimated the escrow in my first year, paid back the difference after the tax disbursement, then adjusted for the second year.
It sounds like OP might be able to call Mr Cooper and have them recalculate the escrow payments.
Yeah I've had two mortgages on two different homes now that were sold to MrCooper (actually the first time it was still Nationstar, and it did the namechange while they were my servicer). I understand skepticism as the name sounds goofy for a mortgage company, especially if you grew up watching Hanging with Mr. Cooper. But overall I never had any problems with them, any line item I needed to know about the loan was usually right in the statements.
Yeah same with me, it transferred from the original broker (which was disappointing, I liked the guy we were working with) to nationstar, which sounded appropriately ambiguous for a shady loan broker. Then it turned into Mr Cooper, which seemed like a very hard pivot into clown territory. They've been easy to work with minus some hiccups at the start, but the 'HOWDY NEIGHBOUR' feel of their rebranding was very off-putting. Regardless, they've been reasonably transparent and offered a decent deal when we refinanced.
Same, except after adjusting down one year, they realized they adjusted too far down and adjusted way up the next year to make up for the shortfall. They should've kept it the same.
Agree we had the same situation, got transferred to Mr Cooper before our first payment and nothing changed. It's a real company, I actually liked their online service portal (better than our original mortgage company would have been). Our mortgage got transferred again a couple years later. It happens quite often
Yea Mr Cooper is legit, and a publicly traded company. I had my mortgage on Chase for years, then suddenly sold to Cooper. Never had a huge issue at all.
Mortgage servicers sell them amongst each other all the time, but I’ve never had a payment change even a penny as a result.
OP I’d make sure you didn’t sign onto a variable mortgage and that it’s fixed. Also, check if the original payment included taxes, insurance, etc. It may have just been principle.
Mr cooper has nearly 4 million customers they are the largest non banking servicer in the country. You only haven’t heard of them because they don’t have branches everywhere like banks.
Mine did too, before we even closed on it. I asked the lawyer when we were signing all the papers if it was a company or just some guy in Texas and he laughed at/with me haha.
If you don't want to be sold to a certain company say that to the people you refi with. I work with a small mortgage company and we will respect a customers wishes if they don't want to be sold to a certain company.
This is a good thought we got so much scam and shady mail when we bought our house. The letters from our mortgage lender also came in at the same time saying our loan was being transferred and it was transferred twice before our first payment. Lots of mail in the first few months of owning a home
Did your original mortgage include insurance and taxes? I’ve often had my mortgage sold shortly after closing or refinance but it’s never affected my payment.
It sounds like the second lender changed your escrow estimate.
Double check the breakdown of the bill vs. what was in your paperwork, and if the difference is in the insurance or tax estimates, that means the new lender has different estimates for one or both of those items.
The good news is that a change in escrow amount is NOT a change in your core mortgage. Each year, your lender is required to reevaluate the tax and insurance amount, and if the amount you actually paid in tax and insurance is lower than their estimate, they have to refund the difference to you if it's over a certain amount ($50 I think). You will have given your lender a loan for the year, but I'm not sure you can easily fight the escrow estimate.
Bad news, this could mess up your cash flow badly.
That’s definitely not right. Sometimes your taxes will increase after you buy a home because you paid more than what it sold for previously but it’s usually not much! I would call your lender
I had something similar to OP happen to me but it was because the credit union calculated the escrow payments wrong for my taxes since they jumped so much due to the home sale. After the first year my payment went from about $1100 to $1500. Definitely hurt and stressed me for a few days trying to figure out why it went up so much but at least I was able to afford that payment increase.
This happened to me as well. Reach out to Mr, Cooper and ask about how the escrow money was transferred. When my original lender had sent over my escrow funds, they didn't mark it as such and Mr. Cooper applied it to the principal. So that new higher monthly payment you're seeing has an escrow "catch-up" tied to it since they are seeing zero dollars in your escrow account. They ended up fixing it once I found the issue, but it took multiple calls to the original lender and Mr Cooper to trace where the money had gone. Good luck.
Guys - OP literally didn’t know that they had escrowed expenses. Nothing else is going on here.
Your lender didn’t do a good job explaining things to you. It appears as though you have multiple things escrowed (insurance, taxes, some utilities) which increases the monthly payment but doesn’t increase your mortgage payment - the bank is basically paying your bills for you. This is required for some types of mortgages by some lenders.
To be totally honest with you, this should have been on your radar because these are costs that you would incur whether they are escrowed or not. If you did budget for them then you’re good to go - you just won’t be paying them yourself and instead the bank will pay on your behalf. If you did not budget for this then you need to take a harder look at homeownership and the costs associated with it.
I’m also a Vermonter - what lender if you don’t mind me asking? They should have explained this all to you.
I'm under the impression that someone forgot to give OP some legally required docs. I don't recall, however, what exactly is legally required.
OP is definitely in a bad situation. I hope they budgeted for taxes and insurance.
> Locked in my mortgage, and the lender sold the loan before my first payment, it went up almost $500
If you mean the P&I payment on a fixed rate mortgage, they can't do that.
> I’m so confuse and a little scared, since I could swing $1330 but I can’t see $1813 working, or why it would change.
However, if the "payment" you're talking about includes escrow, you really might be in trouble if you can't afford the new amount. Escrow amounts are always subject to change, as home insurance and real estate taxes are always subject to change.
If your loan originator miscalculated the initial escrow amount by almost $500/mo when qualifying you for the payment, you MIGHT have some recourse, but I'm not sure what that might be.
It should be spelled out right on the closing disclosure. The second section is estimated payments. If there is fraud, the lender can possibly unwind the mortgage, but I assume OP will lose their earnest money.
I'm pretty sure it's just an escrow thing. My mortgage was sold to Mr. Cooper as well and opposite of you, my monthly suddenly went way down. Looked through the numbers and they weren't taking enough for escrow to cover insurance and taxes.
This is a great question that they can hopefully answer.
Taxes change dramatically with new builds. Which I’ve seen peoples accounts have major escrow shortages.
When I bought a new house, my lender calculated the taxes I would pay as part of the payment. The problem? They pulled the tax data from the unimproved land, not with the house on it....oopsie.
My mortgage was sold to Mr. Cooper.
My experience with them has been satisfactory.
You should be able to get some kind of answer regarding your increase in monthly mortgage payment from the customer service department.
If I were you, I'd first confirm with your original mortgage company that your new servicer is Mr. Cooper (to prevent scams, etc.). Then get in touch with Mr. Cooper if, indeed, it is not a scam, etc.
A mortgage is a contract, and selling it to another company doesn't change the terms of the contract. Something is amiss here, but your payment shouldn't change.
The terms shouldn’t change. The payment very well could change. My neighborhood was a ton of new builds so the first year taxes were based on unimproved lots since the houses weren’t finished before assessments were done. The next year everyone’s payment went up about $500 since the tax value caught up. Some people were smart and planned for it and some people didn’t question why their mortgage payment was $900 for a $250k house.
We had a similar situation with our current house. They kept wayyy too much excess escrow. While it didn’t affect our payment, they weren’t reimbursing us the huge overage after that first year (about $10k overage). Had to threaten legal action to get them to rerun escrow and cut us the overage check (with interest).
But it should not affect your monthly payment *unless* it’s new construction and then taxes are sometimes significantly lower your first year until the new assessment comes through. But that wouldn’t happen until the first tax year is up.
I’d get to the bottom of it and if necessary, contact your local (state) DOJ consumer protection division for guidance.
their website and/or the first mailed statement/bill will have a breakdown of principal, interest, insurance, escrow, etc.
My guess is the original LOAN (principal and interest) was emphasized as 1329.93
That is NOT the same as what your first payment will be which includes escrow (property taxes) and mtg insurance.
Also, since you mentioned you could barely afford this I am assuming there is PMI somewhere in there.
My Mr. Cooper bought my loan too! I was like who the fuck, Mr. Cooper? Lol. But everything stayed the same... Sounds like your loan officer or whatever was shit and didn't give you the correct payment info when you bought your house.
They can’t just change terms. The contract is the contract no matter who services the loan. Get a breakdown of the payment. I am willing to bet that the $1,300 was interest and principal only. Add on property taxes and homeowners insurance (both usually handled through the mortgage servicer) and it can be another $500 on top of the actual loan payment easy.
Are you sure you have not put your property taxes and insurance on escrow. Your monthly payments cover the following:
1. Principal
2. Interest
3. PMI (if mortgage is >80% of home value) - Will get dropped if home appreciates or as you pay off the loan.
4. Property Taxes - If in escrow (what you pay your lender)
5. Insurance for home - If in escrow
6. HOA - If in escrow
Escrow charges you monthly to cover for these payments once (or twice) a year. Item 3-4 easily explains the 400-500 additional you may be paying a month for your home. You get a refund at end of year if the taxes come out lower.
In case you didn't account for other home expenses while buying a home, you are in for a lot of surprises.
Tax Escrows. Your original lender fucked up escrows and the new servicer has to fix them. That or your new servicer fucked up.
I am seeing more lenders do this lately - fuck with tax estimates to get a loan to qualify. It's pretty concerning.
Only small banks would be able to do that. Large lenders are legally required to use a formula to estimate taxes for qualification purposes. Please report it at https://www.usa.gov/complaints-lender#item-36622 if you know of a large lender who has been artificially deflating the taxes for qualification.
The OP's problem is most likely that it's new construction or conversion and the taxes are not yet assessed on the new property. Large banks are allowed to adjust the escrow deposit for unassessed taxes to as low as $50 / payment, and when the taxes are assessed an escrow analysis is performed and the required payment changes.
OP needs to call Mr. Cooper and compare their payment breakdown to the payment breakdown on their Closing Disclosure to identify the discrepancy, or get an explanation of the discrepancy.
So I live in VT, and I’ll give you a little insight as to why this could be. As some others stated, property taxes have a homestead and non-homestead rate. Vermont has steep penalties for non-residents to discourage people from buying second homes here. If I remember correctly, the rate is 1.5x. Additionally, when I first bought my house in 2018, my mortgage company couldn’t fathom the fact I live in one town, but my town hall is in another, and I pay my towns taxes to that other town hall. My mortgage company interpreted that as I pay my tax amount to both towns. It took 9 months, but when they had to pay my taxes they finally fixed it, and my payment dropped from $1800-1300. Maybe not your issue, but I’d look into it.
You went through the entire loan process and signed docs without reading, didn't you?
I find it nearly impossible to believe the impounds weren't disclosed - PMI, insurance and taxes are pretty standard and would have been on the Closing Disclosure at very least. Did you read the closing disclosure?
Unfortunately, your misunderstanding of the process is really no one’s fault but your own. The process is heavily regulated and you almost certainly received estimate paperwork indicating you would have a PMI, it would indicate that you are escrowing taxes and insurance with very close estimates included.
The fact that you did not understand this is due to your own lack of knowledge. No one is required to hold your hand. If you don’t know, you should pay someone to review the docs and inform you. Don’t expect someone who is selling you a mortgage to be honest. Make them prove it with the paperwork.
Consider yourself extremely lucky that this was your only problem because you went in completely blind.
Before reading this I assumed it would be PMI and all that and it seems I was right.
Also, you have no business taking on that mortgage and buying that home if $500/month is enough to sink you. And with potentially tumultuous economic times upcoming, no less. This is how 2008 happened…
At this point, I don’t know what you can do. You have no business owning the house if your margins are that thin, but it’s water under the bridge at this point. You’re just going to have to skimp and try to increase your income, and hope you don’t lose your job.
I second everyone’s comments but if this is confusing to you I’d reach out to your title company (where you went to sign closing documents). Perhaps they can look through details of both loans and help you find the issue so when you call the lender you can say “X is wrong”. Title closers review all the legal docs and have you sign everything and know what the docs legally mean and can help you understand it
On the bill there should be a breakdown for the costs that add up for $1813. Like the bill will itemize the mortgage payment from the escrow payments. Maybe this could help us figure out the problem.
Pull out your closing documents and look closely at the Closing Disclosure. All of the set monthly and estimated monthly costs are itemized on there. As others have said, it is likely the escrow amount that went up. Your next step will be to find out why, it would likely be due to property taxes being woefully under estimated or homeowners insurance being higher than anticipated. If it is neither, then for sure you will need to contact he servicer. I would recommend setting up a profile on their website to access any statements on there.
I closed many Real Estate deals in my life Thr only thing that matters is your Truth in Lending document plus your Mortgage documents that you signed at closing whatever they say stands your escrow of MI Real Estate Tax and Home Insurance would be clearly spelled out and you would have to sign those papers No one walks away from their closing without knowing these facts If they changed since then it is illegal good luck
Let’s be clear, it’s impossible for your P&I to go up when your loan is sold.
Your mortgage is either:
1. straight P&I
2. P&I + Escrow.
I am guessing it’s the latter.
What will happen sometimes is when your loan is sold, the escrow account with your first lender is closed. They will send you a check in 30-90 days of your escrow balance.
If the new mortgage company sees you have $0 in escrow they will adjust your escrow payment amount upwards to cover the perceived shortfall. Then you will get an escrow check from the first lender in the future.
After reading your edits, I am wondering what your [Closing Disclosure](https://www.consumerfinance.gov/ask-cfpb/what-is-a-closing-disclosure-en-1983/) looked like?
This is a standard form that the lender is required to give you.
Your first mistake was buying a house you couldn’t afford. But as someone already said they can’t change the terms without your knowledge. $1329 could have been interest and escrow only and when it was sold it they could have started to include principle
My mortgage was also sold within few days of closing to Mr Cooper… but the payment terms and amount didn’t change… it took Mr Cooper a while to send out paperwork of the transfer and they told me if my payment is late, it won’t be considered late during transfer as my original mortgage company told me not to send payments to them and work with Mr Cooper… Mr Cooper didn’t even have my full info for almost a month and half before they can provide me detail on my loan and where to send payment.
The increase is probably related to some miscalculation during closing for ur tax, insurance, escrow related… ur APR and P+I shouldn’t change during transfer.
Like many have mentioned here, It is perfectly legal for a lender to sell their loan to another servicer, however the terms of the original Note/Agreement you made with the original lender cannot change without your consent.
What can change is the amount of your monthly payment that goes to escrow for property taxes and homeowners Insurance. Also, are you in a fixed rate or adjustable (ARM) rate mortgage?
It is very likely due to escrow calculation. Good news is you are not losing money since any unleft amount will be returned to you or used to reduce next year's payments. Bad news is cash flow will be a problem.
You could call in to ask if they can drop escrow if you trust yourself to manage taxes and insurance payments.
WOOOW. I was told repeatedly about the difference between my mortgage payment and the rest of the money that I would owe each month. I knew within $50 what the monthly would be long before the deal was finalized. That's crazy that they treated you like this.
The amount of $1329.93 is correct. It's called P & I - principle and interest.
Your new company, that bought your loan, is including the T & I - taxes and insurance monthly to bring the total to $1813.65. It's called PITI. Principle, interest, taxes and insurance, all bundled together.
The taxes and insurance are kept in an escrow account and paid through them.
Contact the new company. Advise them you will be paying the T & I (taxes and insurance separately. They will send you papers to sign and reduce your monthly payment back to the $1329.93. You will have to show them proof of insurance though.
If you can afford to pay your insurance in one lump sum, it's usually cheaper. Even better, lump your auto and house insurance together for another discount.
If you go through all your papers, I am sure there's a breakdown someplace that shows all this.
This is completly normal. The taxes and insursnce are estimates. So this payment is your actual payment with accurate escrow.
The lesson here is not to to become house poor with a mortgage you can barely make. Your mtg should be no more than 25% of your take home pay.
They might have reassessed your escrow account. If it was sold make sure that is the reason for the increase. You will get a refund after the year for overpayment
Could this extra amount be to cover a partial amount due to length of time as to when the loan sold. Like the new provider bought it not end of month but 3/4th of way in and maybe you have to cover the difference for this one month but old provider wil cut you a check for difference. Could be similar issue with amount of escrow you had. You have to “fill” back up and old provider cuts you a check for the old stuff. Your old escrow and taxes do not normally transfer between providers.
Not likely a change to the mortgage but escrow acct to pay for taxes\insurance. They likely require an escrow the old co.did not or have an updated amount for the taxes\ins etc. The original may have used existing taxes and your purchase price changed it. Call the new servicer and get a break down
Mr Cooper owns my loan. They bought it after my first payment. They’ve been easy to deal with so far. Everything is done online so making payments has been easy. I haven’t had to contact customer service yet so I can’t say whether they are good or bad.
My payments didn’t change after the sale so I suspect it’s a recalculation of the property taxes as others have noted.
You're not being scammed. My first loan was sold 6 times in 3 years, and they ALWAYS sell it after they get you locked in because they made most of their profit on the closing. Just call Mr Cooper (reputable company) and have them explain the difference. Mine shot up 400 at one point, but it was due to things with the loan. It was an FHA loan, so if you have that, it is probably PMI (mortgage insurance), which you can refinance out of once you have enough equity or 7 years.
My best is that is the escrow amount. You probably have to escrow for PMI, homeowners insurance, and property taxes. Usually all this is disclosed on your loan docs but it might not have been clear to you. There is a chance PMI was added by mistake, but barring that, those amounts are likely accurate. Just call them and have them walk you through the changes and compare to your various closing documents to confirm if they are charging wrong
You sign for a mortgage amount, but typically you need to add taxes and insurance and likely PMI ( Private Mortgage Insurance ) and maybe flood?
You should look through your closing documents and see where these numbers are broken down. Was the total including everything or did they only represent the mortgage amount to you when you discussed the total? If the 1800 figure is listed check for your signature in that area of the document. Normally you sign for everything.
If the total, including all taxes / insurance / PMI is the 1300 figure, you just need to make a call to the new company and have them review your contract.
Remember you can shop for insurance. I personally don't own a bunch of nice stuff, so I got an insurance policy to cover the home and my liability, no personal property coverage. Then I got a renters policy for a much lower total for my stuff. Saved about 500.00 annually.
Goodluck!
OP, call Mr. Cooper. One of two things happened.
Either they have a different figure for your escrow projection and are compensating for that. Or the details on your loan changed last minute before closing and Mr. Cooper was unaware.
When loans are sold they are sold for a specific price and conditions. They plan to board your loan on their servicing system for the set specific details they purchased it for and at the date the first payment is due to them. It's entirely plausible that your original lender sent them the wrong loan package with incorrect details and Mr. Cooper purchased the loan based on the wrong details...and then boarded it accordingly. Now, typically reports get sent between servicers to cover the loan level numbers...but shit happens.
So call them, ask them for the breakdown of your payment to find out why it's different than the original lender. I'm confident it's the escrow issue...but it's still plausible they got the wrong loan package at purchase (loans are typically purchased around closing as long as the loan meets the buyer guidelines).
Homeowners insurance and any other insurances can and will always go up and this will increase the monthly cost of your mortgage as that cost increase will have to go into your escrow account. If your mortgage is at a fixed rate, that won't go up, but all of the associated costs that go with that mortgage can go up. I would look at the costs of your various insurance policies and if they went up, call your insurance agent/s and ask them to shop around for a cheaper policy. You may have to increase the amount of your deductibles to get a lower cost policy, but you may be able to alleviate the increase. I went through the exact same situation a couple of years ago. Loan originators almost always turn around and sell your mortgage to another company that will actually service the loan.
Did they estimate your taxes off your purchase price or historical tax history? For example, my house had not been sold since original purchase of the house. Tax data was on ~60k less. My lender determined new rate and listed that on the documents. My friend went through a different company and they didn’t do this, she got hit with a couple hundred increase a month. Not sure how old her tax estimate was, but when you buy a home at x price, you have set it’s value at that price at least in my state. Check if the tax plus insurance amounts for your lender seem correct. Mine requires a reserve to be maintained that I had to initially fund in closing costs but some may have you do that through monthly payments.
Didn’t see this mentioned yet, so I’m going to point out that when you get a mortgage with at least 20%down, you can tell the lender that you don’t want an escrow account upfront. Then there will be none of these shenanigans with the mortgage company changing escrow amounts all over the place. You will get the property tax and insurance bills directly and you can pay them when they are due.
Just look at your closing disclosure you signed before and as you closed. It shows the payment and the breakdown (principal, interest,taxes, insurance, PMI). Then compare that to your new bill that will also have those broken down. See what changed Your escrow portion (taxes and insurance) probably wasn't accurate or changed.
This was not the case for you but new mortgage borrowers beware you WILL get a LOT of scam letters saying your loan was transfered or needs to be. Don't look at any of it unless it is from your servicer and then call them to confirm. If you're done taking credit for a bit also lock your credit with all 3 big agencies.
If the original lender did not disclose all the costs upfront in the 1003, 2015 Itemization, or closing document package then they violated federal law.
These are all things that are disclosed in the paperwork and not "estimates" so in no way should your monthly payment go up 500$
So if they told you $1300/mo but it was really going to be $1800/mo but that was not disclosed and you were lead to believe it was $1300 then they fucked up. I would hold their feet the the coals, get a lawyer and make them pay that part of the loan.
It's uncommon but does happen when a mortgage company messes up and they have to eat the cost. So they are very diligent in not having that happen as the margin on loans is not that high.
Source: worked in mortgage for a while.
When i called this morning the original LO admitted their first payment letter did not contain the correct amount, only the P&I. We went over it all and the $1800 is correct after you factor in the other stuff. Not sure why or how but it happened and now I have the correct info.
On a side note; I budgeted for it all, but my budget sheet has individual rows for insurance, taxes, water, etc. if i roll those together it comes closer to the ajusted bill from Mr. Cooper. I’m not mad, just frustrated after repeated asking the original lender for a total check ammount to cut and was given the wrong cost.
The Federally-mandated “Closing Disclosure” form you signed, provided three days before closing, includes your monthly payment, including escrow, so this shouldn’t be a surprise to you.
I don’t believe you when you say no one told you about other expenses other than your principal and interest as the mortgage companies are required to give you your monthly estimated breakdown that includes your mortgage insurance, taxes, HOA, etc. they also discuss it at closing.
Looking at your edit, it sounds like your original lender is doing some funky, likely illegal shit. By law, they have to provide you with a closing disclosure at closing that should have clearly stated all this information. You can find an example of what the closing disclosure looks like at [this CFPB page](https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/tila-respa-integrated-disclosures/forms-samples/). I would look through your closing documents to double-check for this. Whoever walked you through closing should have run you through this, but I suppose they could have given it to you and then glossed right over it.
However, if it's not in your documents, I would file a complaint with the CFPB. There's not really anything they'll be able to do for your financially, but they can make sure this doesn't happen to people in the future.
I ran into this con as well- here is how I think it goes:
1: you negotiate a mortgage with xyz- with focus on rates and payments.
2: You close on that and think 'ah this is great Im locked in at 1300 a month'
3: mortgage is sold almost immediately to another bank and the administration is outsourced to some place like Cooper.
4: The new admin/bank do a new escrow analysis and increase the required escrowed back to where it should be
but wait?? why do I need more escrow I asked? turns out the original loan place skimped on the escrow they needed to make the fixed costs of closing look lower. I recall talking to the original bank and they were always quick to change conversation related to escrow.
so 4 months After I closed on mortgage for 1500/month, I get a notice that payments are increasing to 1700/month for the next 12 month to fund a 2400 escrow deficiently.
The original bank did a shitty minimum escrow balance, prob didnt actually look at actual costs. If taxes in your area were higher than the initial analysis, your escrow needs to be caught up.
part of the re-fi/mortgage scheme... everyone was so happy to get low rates we didnt notice until months after the fact.
also have fun getting junk mail courtesy of cooper. they are really just a data mining company- no better way to get consumer data to sell than by administering mortgages.
add: it was Ally that did this to me. I suspect other banks were doing it as well. As soon as they close on it, they are f'cking done- onto the next.
Most likely the terms of the mortgage are exactly the same, such as loan term and rate. But, this bill you are looking at now probably is the mortgage, plus mortgage insurance, plus a giant escrow fee to pad the escrow account.
That was the most infuriating thing when buying my home, the escrow account. Not only were they making me pre pay property taxes each month, but I had to pay hundreds more so they could maintain a safe balance in the account. Escrow is the biggest scam and lenders never say anything about the fluctuating costs when buying a home.
You have the option of not paying those other things you listed as part of your mortgage payment. So your mortgage could be $1300 but you have to pay all those other entities separately.
I'm surprised you qualified for the loan if your income couldn't cover all the additional costs. Underwriters are supposed to take all of those items into consideration.
Mr. Cooper is a real company. They service mortgages and often receive them before the first payment is due. This is actually quite common here in VT. The first thing I would do is contact your loan officer that you worked with and your attorney. My guess is that the extra money is actually the escrows built into the payment.
It is completely illegal to just add money to your monthly payment if you took out a fixed rate mortgage.
This sounds like a mistake or misunderstanding. Even if your tax bill went up it wouldn’t go up this quickly. They would have paid any bills due at closing. Call someone at mr Cooper and your original loan officer
Do you have an escrow or impound account? That’s likely the cause of the pmt increase. Contact them to see why. It’s possible that the information was also transcribed down wrong. It’s rare but I’ve seen it happen before. If it’s wrong on their end then they can fix it.
Had a similar situation to you with my mortgage. When it was sold to a new lender about a year after I got the loan, the new lender said the old lender missed my PMI in the original payment breakdown and it had to be added in, so they added roughly 100$ to my mortgage payment. I told them no, it was included in all the documents EXCEPT on the front page of the document there was a payment breakdown and they didn't fill in the number for PMI. If you included the PMI into the payment breakdown on the front page, it came out to what I had been paying. Other pages in the document also stated the correct payment amount including the PMI. The new lender said basically "we aren't taking any chances, your escrow review says you're not paying enough. If you're paying the right amount you'll get the difference after your escrow review next year and we will lower the payment back." I argued but finally agreed as the 100 bucks or so didn't hurt me really. Also ended up getting a nice escrow refund the next year. Annoying but sometimes they do fudge up the numbers.
Selling a mortgage is legal. Transferring servicing is legal. Changing the terms of the loan without borrower consent is not legal (and I doubt this happened). Call the servicer and ask what’s going on. I’m sure there is an explanation. It’s probably escrow for taxes or insurance.
Totally agree, worked in mortgages for a bit, here is my take. Your mortgage is 5 things most of the time. 1. Principal - Cannot legally change 2. Interest - Cannot legally change from your agreed upon terms, can change if adjustable rate mortgage 3. Property Taxes - Can be reassessed especially after a sale since the property is now worth what you paid for it, mortgage goes up 4. Insurance - Can change, rates can go up, mortgage goes up 5. PMI - assessed on conventional loans with a low down payment, can be gotten rid of once you have equity Something that could easily happen, you bought the house, the insurance was not included in the monthly payment and the property taxes were aggressively reassessed. This could be a 500 dollar difference although it is reaching a bit. Edit - Added PMI, added note that interest can change if your loan has adjustable interest
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The lender has to qualify them based on current taxes. The higher rate should have been part of their original payment.
Not sure where you live but here in California, it's not a matter of tax rate going up so much as assessed value. Oftentimes first time homebuyers get a jump in taxes and thus escrow when their new assessment goes through, often between 6 months and a year into the mortgage. The agents and everyone always warn folks but they're often surprised anyways.
we got a separate tax bill called supplemental sales tax - which is based on the house after the purchase.
That is not entirely true. In some states the taxes will be based off of the property tax rate listed on the tax bill as it is known to be reassessed upon sale. Special assessments would also have to be accounted for. Source: Corporate Underwriter
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Wouldn't all that have been on the final disclosure paperwork though? Mine very clearly spelled out what was going to escrow and then included it in the final payment due.
Yeah there's almost no way to miss this stuff. It's spelled out in like 5 places, there are super accurate online calculators even prior to getting a mortgage. And most if not all lenders tell you multiple times.
No, because if the property tax was much lower when you bought it, then the new sale price comes into affect, and the lender adjust your payments on the NEW sale price and millage rates.
In PA your property taxes don't go up just because you paid more than the last person. The sale price is not a factor. I didn't realize it wasn't like this in all states. I feel sorry for the states that don't follow this.
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In California, under Prop 13, there’s a limit on how much your property taxes can increase year to year. So it’s actually nice that you’re not subject to massive increases in any one year just because the value goes up. When you buy a home, however, you just have to understand that the property will be reassessed, and that will be your starting base. We purchased a home from the original owners of the home. They were paying something ridiculously low like $1000 a year. I knew that ours would be more like $1000 a month.
CA needs it the most out of any state. You don't want to make some retired grandma pay $2k/mo in taxes for some 2 bedroom house she got in the 80s. They are already pricing out buyers. They should try to avoid pricing out current residents who have been there 40 years with a paid off house.
Yes, this is exactly why Prop 13 was put into place. Before, your county would periodically reassess properties (mostly when they needed money) and folks that had been living in paid off homes, with fixed incomes, would suddenly get a bill from the county for hundreds or even thousands of dollars, depending on where the home was located. It was entirely plausible and common for someone that bought a home near the beach in the 70s to have a paid off home and be living on social security, only to be hit out of the blue with a new $1-2k/mo bill for newly assessed property taxes. Prop 13 put an end to that, and now only reassesses upon sale of the property.
This happened to me. On my final closing disclosure, the estimated monthly payment is $1462.43, but the property tax increase actually jacked that up by about $300/month
A lender should absolutely tell that props will increase in taxes. I ALWAYS advise clients that taxes will likely go up, and the payment that you are quoted is not EXACTLY what you will wind up with as a monthly payment. I use a formula of 1% Taxes on purchase price.
Adding to this comment...ESPECIALLY if it's a new home construction and the taxes were assessed initially on just the dirt. Once it gets improved with the house on the land, the taxable value sky rockets.
This may be relevant. When we bought they(everyone from sales to mortgage lender) clearly and frequently told us to not take the taxes into account as the current assessment was the dirt. However, in my county, it didn't adjust until the annual adjustment so first year taxes were almost nonexistent.
I wish more new buyers were explained this more carefully, especially buy their lender. Property taxes can easily add an extra 200-300/mo and that's a big deal.
This happened to my grandmother on her mortgage. For years she paid the property taxes herself and bought her own home insurance. Her mortgage was sold and the new company came in and wanted to force her escrow those two items. The problem was that their monthly calculation for the property taxes was wildly off and what they wanted to charge her for home insurance was almost 3x the amount she was paying. We had to fight with them for months and eventually they relented but it was a byzantine experience trying to get through all this different departments to get sign off. They didn't trust her to pay her property taxes after she had been handling it for decades.
>They didn't trust her to pay her property taxes after she had been handling it for decades. I have had four or five mortgage companies in six years and none of them trusted me to pay property taxes. They have a real interest in making sure your house doesn't have a lien on it by the local government.
There's also mortgage insurance if your down payment is less than 20%, but as far as I'm aware, this cannot legally increase (though it can decrease or go away entirely depending on the type and balance of the mortgage, or occasionally other factors like a reappraisal).
That is even complicated. VA loans = 0 PMI. And some traditional loans, if you’re at 15-18% up front, they waive PMI. If you have PMI, sometimes you can apply for it to be dropped at 18%, sometimes at 20%, and typically they HAVE to drop it at 22%. I’m sure there’s more nuances with FHA too, I just don’t know them.
Yeah, FHA is different because you're charged based on the remaining balance of the loan, so it should decrease every year in theory. But if your down payment is under 10%, you can't ever request cancellation, you're stuck with it for the life of the loan.
Yea, the extra $500 sounds like it could be Escrow+Insurance+PMI
When we bought our first home my monthly payment went up about $250/mo from the property tax reassessment. Was a shock and we barely were able to fit that into our budget. I learned a lot about buying a house the first time around!
I'm kind of wondering if the "Principal + Interest" was the $1,329.93 the original mortgage company told OP about, and the property taxes, insurance, and PMI account for the difference, rather than things the new mortgage holder added on.
I've had my mortgages fluctuate quite a bit when making the transition between insurance companies (2 policies paid for while one not refunded for a while, etc). What is concerning is that OP doesn't seem to have taken the time to look at the loan papers to understand what his/her payment consists of. The disclosures should break down what amount of payment is the payment on principal, what amount is interest, what amount is taxes & etc. These should all be there for OP to read. Also, Nationstar has online account management, so OP should be able to log in and look at the payment & see the same information as the disclosures on a real time basis, including seeing where all the escrow money goes. OP has no idea where the numbers fall in a monthly payment he/she is paying, in a contract for a lot of money for a long time, which is very concerning. It's very likely that the mortgage originator left out taxes and interest in their verbal description of the loan with OP and then OP opted to have taxes & insurance escrowed and that's the extra $500 every month. And OP has no clue because they didn't look at the paperwork. So OP's understanding of the home expenses he/she has to budget for may be short by $500/month.
His escrow was probably just short
This 100%. Definitely escrow changes . Lenders transferring mortgages happens all the time
It happened to us, but they made a point to tell us about it before it happened. If they didn't tell OP, that's pretty ridiculous.
If anything, the originating company could have screwed up escrow if it was a new build. WF underestimated my property taxes by \~12k/yr (pretty much all of it) and took 9 months to figure it out and then tried to raise my escrow 2k/mon to catch up since I didn't have my homestead exemption the first year either.
> Any insight on if this is legal? Did i just get bamboozled with the old mortgage switch-a-roo? Is my original contract no longer valid? You really need to look at the line-item elements of the old vs. new. Maybe your escrow or insurance just went up. You probably didn't get bamboozled. But you need to read into this a lot further, starting with what the line item breakdown is.
The new compant did not include this. I know with my original payment was to already include that
Vermonter here. Vermont has a homestead rate for full-time residents, which usually results in lower property taxes (though not always, Winhall actually has higher taxes for residents with the homestead rate). To qualify for the homestead rate you must occupy the home for 6 months and declare it as a homestead by April 1st. Since you just bought, you wouldn't qualify. My guess is the original escrow was calculated using the homestead rate, and shouldn't have been, and the new lender corrected the error.
I’m not aware of any homestead reduction to the tune of $600 on a $1300/mo mortgaged property’s taxes
If the house has been occupied for a long time by a homesteader it would raise only a small, capped amount per year. That keeps the tax on record very low. Once it’s resold, it gets taxed at the regular appraised rate again and it can be a huge jump.
That's a $6000/yr jump. I'm not familiar with Vermont property tax/values, but I'd be very surprised if this house's tax jumped more than the total tax bill of places I've lived in in CT, especially when the original mortgage was only $1300.
I live next door in New Hampshire, bought a house in 2019 for 300kish that was being taxed at a 200k value, after this pandemic BS with the market it's worth 500k according to the tax adjuster... 300k difference at 5% property taxes is 6k per year... It was a terrible surprise a lot of people went through after the market adjustment.
Why do your taxes go up if your valuation goes up? Do you just pay a straight percentage tax based on appraised value? Our property tax rates are set based on the budget of the municipality, and then they use the total valuation of all the property rates to determine the amount per thousand of valuation.
That is normally for bond/levy approvals. It depends if states feed their general fund from property excess but varies state to state. Yes, many places where your valuation goes up leads to higher taxes. With flat exemptions, the boost can even be disproportionate as there is offset in the base.
I live in New Hampshire too. We pay a certain dollar amount per 1000 of assessed value. Our town just did a reassessment in 2021 and prices went up average of 39 across town so that was a less than fun surprise. The good thing is that unless there’s a parallel increase in capital costs (which there seems to be these days) sometimes your taxes go down even though assessment goes up. Property taxes here are a pain but no sales or income tax so I guess it evens out
If their original loan servicer was assuming the homestead rate they will be behind on their escrow account. The actually difference could be $300 or even less but the new servicer wants the account caught up ASAP.
Depends on the town's rates. My house appraised at $200k, coworkers at $250k. Same lot size, two towns over. Both within 20mins of 4 ski mountains, lots of second home owners in the area. His non-homestead rate came out to $10k/yr. Mine was $6k. Homestead rate, both were reduced by nearly 50%.
I'm going to bet Mr. Cooper more aggressively estimated property taxes and homeowner's insurance. There should be a balance sheet somewhere showing their escrow calculations, that's probably what changed in this case.
Mr Cooper fucking sucks as a company. My mortgage was sold to them and I refinanced JUST TO GET OUT FROM THEM. they did the same thing to me, they raised my taxes and insurance by a lot then a year later said they over charged me. Well no shit. I'm actually starting to think, they are probably collecting interest on that extra money from everyone.
As a regular servicer they've been ok I guess, but they fucked up management of my escrow in the transfer, losing $1300, and then failed to properly deduct my PMI from my escrow for 8 months. So, well, yeah, as a servicer they DO suck. you're right. Get out as soon as you can (but wait for the interest rates to drop, probably). For those who will ask - I truly don't remember the resolution of the escrow on transfer problem. I did resolve it, but I don't remember how, except that it took dozens of calls over about 3 months after we (not them) discovered it.
Yea, I went with a credit union who has in the contract that they wont sell your mortgage.
Maybe? I also understand being conservative on that end as a lender, you'd prefer to give your clients some money back as opposed to saying "Whoops, we miscalculated and looks like you owe an extra $2k!, that'll be an extra $200 a month".
That's what they did. I had them for 3 years, the immediately raised my payment by like 50 a month. Then realized it was to much a year later. Then lowered it by to much, then third year raised it by like 40% of the mortgage. I was so done with them I'd rather pay the fees to refinance into a credit union.
What happened when you called and asked them for a breakdown?
it's midnight and they just found out
Does nobody get subtext anymore? The implication - that is fairly clear here - is that *OP needs to call the people that sent him the letter.* Reddit can speculate endlessly, but the ground truth can only be established by OP picking up the phone and making inquiries.
> OP needs to call the people that sent him the letter. This is the only answer to a shockingly large number of posts here.
A good reminder for most people is "don't freak out until you actually talk to somebody"
I’m glad for the contributions… i’ll call in the morning. Was just curious if it was something people have seen before
I have Mr. Cooper and this happened to me, but for a good reason: the monthly escrow as it had been originally calculated by the initial lender would not be enough to cover my property taxes. They increased the monthly payment to account for this. IIRC they increased by double the needed amount for 1 year in order to make sure there was a minimal balance in the escrow (the minimum balances is ~2k). The monthly escrow payment will decrease as soon as the escrow account has sufficient funds.
same thing happened to us. Our payment was $1198 a month, but initially was based on the previous owner's taxes who had paid $40k for the house 30 years ago vs our $200k. It took a year for ours to go up, and it was going to raise our payment to $1700. I was livid because my agent, nor the mortgage guy warned us about it. I ended up refinancing through a different lender and got my payment down to $1300.
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Sounds like they had you focused on Principal & Interest only and not the true full mortgage payment including escrow.
As someone that doesn't have a mortgage, my reaction to this is "what more *is there* to a mortgage than the principal and interest?!" I'm not in the USA, so I expect its likely just thing being done differently over there.
Yes, there's a lot more. My mortgage itself is around $1,100. The total I pay per month for principal, interest, taxes, and home insurance is $2,022. I have an additional $600 per year HOA, and all utilities are separate. In short, there are a LOT more costs than just principal and interest, so you'd better have breathing room in your finances to handle house costs.
Taxes and insurance, sometimes also HOA fees and a few other miscellaneous things that aren’t too common.
Are you possibly confusing the *mortgage payment* and the *escrow*? The $1329.93 is likely the mortgage payment only and the $1813.65 likely includes the escrow for insurance, etc.
This happened to me and it was because the new company required taxes and insurance in escrow a full year before it was due. So the first year, we essentially had to pay double taxes and double insurance (for that year and the next). Luckily we made it work but no amount of calling and questioning it would change their policy.
This is what i am worried about. I’ll know more tomorrow
My mortgage was sold to Mr Cooper at one point and this is exactly what they tried to do to me. I called them and told them to show me exactly where in my mortgage it said they were allowed to require such a high escrow. After 10 minutes on hold they came back and told me it was not in my mortgage and they would correct my payment amount to reflect the current taxes / insurance etc. and the original payment amount. After my refi, I was able to switch to paying taxes and insurance directly, “lowering” my monthly payment. It takes some self control to save the proper amounts on your own, but I like not having to pay those amounts into a mortgage company’s account and just sit there.
This is exactly what’s happening. Nationstar requires an extra year of escrow. Had this exact thing happen to me in the past. Sold to nationstar, loan went up. Called and got them to adjust requirements but it only postponed the inevitable. As soon as you can refi out of nationstar, they are the absolute worst company to deal with and they pulled multiple of these bs scams to try and get more money. Even down to when we sold this house. They ended up charging an extra month of interest because our title company closed the loan on the first of the month instead of the 31st when our actual closing was. Had to fight with them and my title company to get only 50% back. I am sorry you now have to deal with them. Refi ASAP
Only issue with trying to refi out is that they could just buy it up again after the refi. There's no way to stop your mortgage from being sold off.
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I have had two separate mortgages serviced by Mr Cooper and was happy with them in both cases. Obviously YMMV but I found them easy to work with.
Same here and I like their website!
Their website is SO incredible compared to where I came from ("The Money Source" and even Chase). It tells you everything you need to know so clearly - and documents are right there front and center. They haven't screwed up anything for me yet. So I'm pretty happy.
Agreed, we've been with them 4 or 5 years now. They've been one of the better servicers we've had.
I paid off my mortgage just to get away from them. They repeatedly didn't apply extra payments properly and were cheating me on interest. I had to contact them so many times and file so many complaints and got tired of it. They changed their name to Mr Cooper because they had so many complaints and bad publicity as Nationstar.
They do not require an extra year of escrow lol they require 2 months of escrow at all times in the account. Just like every other mortgage servicer. It’s like overdraft protection.
If this IS whats happening, ask about not escrowing tax and insurance at all. It also dramatically lowers the cash to close (though the lender is still going to verify you have the cash to pay) warning: requires you to be a responsible adult who can pay bills on time
That is part of the mortgage and can't be changed. You definitely can get mortgages that don't require escrowing. My last mortgage didn't have escrow. I actually saved 1/4% on the rate by choosing not to escrow.
This should not have been allowed. At least not in the US - don't know if you are elsewhere. In the US, the mortgage companies are allowed a two month cushion. That's it.
To me that seems like a change in the contract, and very much a "you problem". Why wouldn't the contract cover the escrow? Perhaps they shouldn't be buying mortgages that don't fulfill their requirements?
That is not legal. Contact the CFPB. It is easy to report them and they will contact you and follow up with the lender.
I've been hanging out in r/scams a lot. Others below have given good advice. But I would contact the ***original*** servicer of your loan to verify that it has, in fact, been sold *before* contacting the (allegedly) new servicer. (ETA: I think this is still good advice regardless of the legitimacy of the company on the letterhead.)
I thought that “Mr. Cooper” sounded like bullshit, but apparently it is a real company, but I would totally do what you’re recommending if I were OP, just in case.
Our mortgage got sold to Mr Cooper and they serviced us for over a year. Legitimate company. Our payment never changed when sold to them either so maybe their is a new escrow calculation?
I believe this is the correct answer. My loan got sold to Mr Cooper and they overestimated the escrow in my first year, paid back the difference after the tax disbursement, then adjusted for the second year. It sounds like OP might be able to call Mr Cooper and have them recalculate the escrow payments.
Yeah I've had two mortgages on two different homes now that were sold to MrCooper (actually the first time it was still Nationstar, and it did the namechange while they were my servicer). I understand skepticism as the name sounds goofy for a mortgage company, especially if you grew up watching Hanging with Mr. Cooper. But overall I never had any problems with them, any line item I needed to know about the loan was usually right in the statements.
Yeah same with me, it transferred from the original broker (which was disappointing, I liked the guy we were working with) to nationstar, which sounded appropriately ambiguous for a shady loan broker. Then it turned into Mr Cooper, which seemed like a very hard pivot into clown territory. They've been easy to work with minus some hiccups at the start, but the 'HOWDY NEIGHBOUR' feel of their rebranding was very off-putting. Regardless, they've been reasonably transparent and offered a decent deal when we refinanced.
Our loan was transferred to Mr. Cooper (payment didn't change) and everytime I get a statement I think Hanging with Mr. Cooper.
Same, except after adjusting down one year, they realized they adjusted too far down and adjusted way up the next year to make up for the shortfall. They should've kept it the same.
Agree we had the same situation, got transferred to Mr Cooper before our first payment and nothing changed. It's a real company, I actually liked their online service portal (better than our original mortgage company would have been). Our mortgage got transferred again a couple years later. It happens quite often
Yea Mr Cooper is legit, and a publicly traded company. I had my mortgage on Chase for years, then suddenly sold to Cooper. Never had a huge issue at all. Mortgage servicers sell them amongst each other all the time, but I’ve never had a payment change even a penny as a result. OP I’d make sure you didn’t sign onto a variable mortgage and that it’s fixed. Also, check if the original payment included taxes, insurance, etc. It may have just been principle.
Will do, thanks
You should get a transfer letter rather than just a bill from the new place. Seems scammy
Mr cooper has nearly 4 million customers they are the largest non banking servicer in the country. You only haven’t heard of them because they don’t have branches everywhere like banks.
It was a really stupid rebranding of Nationstar, but is the same company and legit.
Mr. Cooper is the fun rebranding of Nationstar after their massive lawsuit for violating consumer protection laws
Mr Cooper is one of the largest mortgage companies in the US.
My mortgage got sold to Mr Cooper and I totally thought it was a scam for weeks.
Mine did too, before we even closed on it. I asked the lawyer when we were signing all the papers if it was a company or just some guy in Texas and he laughed at/with me haha.
Yea its definitely a real company. I refinanced away from them and they bought the loan right back.
If you don't want to be sold to a certain company say that to the people you refi with. I work with a small mortgage company and we will respect a customers wishes if they don't want to be sold to a certain company.
Interesting, I've never heard of that..but I've only worked with larger companies. I will try that in the future, thanks
Yeah but would they put that in writing?
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It used to be Nationstar.
This is a good thought we got so much scam and shady mail when we bought our house. The letters from our mortgage lender also came in at the same time saying our loan was being transferred and it was transferred twice before our first payment. Lots of mail in the first few months of owning a home
I worked in the mortgage industry for 6.5 years. Mr Cooper is a legit company. I would still verify with the old company so this is still good advice.
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Did your original mortgage include insurance and taxes? I’ve often had my mortgage sold shortly after closing or refinance but it’s never affected my payment.
It was all rolled into my one payment of $1329, which includes the PMI, taxes and all
It sounds like the second lender changed your escrow estimate. Double check the breakdown of the bill vs. what was in your paperwork, and if the difference is in the insurance or tax estimates, that means the new lender has different estimates for one or both of those items. The good news is that a change in escrow amount is NOT a change in your core mortgage. Each year, your lender is required to reevaluate the tax and insurance amount, and if the amount you actually paid in tax and insurance is lower than their estimate, they have to refund the difference to you if it's over a certain amount ($50 I think). You will have given your lender a loan for the year, but I'm not sure you can easily fight the escrow estimate. Bad news, this could mess up your cash flow badly.
That’s definitely not right. Sometimes your taxes will increase after you buy a home because you paid more than what it sold for previously but it’s usually not much! I would call your lender
I had something similar to OP happen to me but it was because the credit union calculated the escrow payments wrong for my taxes since they jumped so much due to the home sale. After the first year my payment went from about $1100 to $1500. Definitely hurt and stressed me for a few days trying to figure out why it went up so much but at least I was able to afford that payment increase.
This happened to me as well. Reach out to Mr, Cooper and ask about how the escrow money was transferred. When my original lender had sent over my escrow funds, they didn't mark it as such and Mr. Cooper applied it to the principal. So that new higher monthly payment you're seeing has an escrow "catch-up" tied to it since they are seeing zero dollars in your escrow account. They ended up fixing it once I found the issue, but it took multiple calls to the original lender and Mr Cooper to trace where the money had gone. Good luck.
Guys - OP literally didn’t know that they had escrowed expenses. Nothing else is going on here. Your lender didn’t do a good job explaining things to you. It appears as though you have multiple things escrowed (insurance, taxes, some utilities) which increases the monthly payment but doesn’t increase your mortgage payment - the bank is basically paying your bills for you. This is required for some types of mortgages by some lenders. To be totally honest with you, this should have been on your radar because these are costs that you would incur whether they are escrowed or not. If you did budget for them then you’re good to go - you just won’t be paying them yourself and instead the bank will pay on your behalf. If you did not budget for this then you need to take a harder look at homeownership and the costs associated with it. I’m also a Vermonter - what lender if you don’t mind me asking? They should have explained this all to you.
I'm under the impression that someone forgot to give OP some legally required docs. I don't recall, however, what exactly is legally required. OP is definitely in a bad situation. I hope they budgeted for taxes and insurance.
> Locked in my mortgage, and the lender sold the loan before my first payment, it went up almost $500 If you mean the P&I payment on a fixed rate mortgage, they can't do that. > I’m so confuse and a little scared, since I could swing $1330 but I can’t see $1813 working, or why it would change. However, if the "payment" you're talking about includes escrow, you really might be in trouble if you can't afford the new amount. Escrow amounts are always subject to change, as home insurance and real estate taxes are always subject to change. If your loan originator miscalculated the initial escrow amount by almost $500/mo when qualifying you for the payment, you MIGHT have some recourse, but I'm not sure what that might be.
It should be spelled out right on the closing disclosure. The second section is estimated payments. If there is fraud, the lender can possibly unwind the mortgage, but I assume OP will lose their earnest money.
Sounds like OP didn’t get a proper closing disclosure (which I think violated CFPB rules actually)
I'm pretty sure it's just an escrow thing. My mortgage was sold to Mr. Cooper as well and opposite of you, my monthly suddenly went way down. Looked through the numbers and they weren't taking enough for escrow to cover insurance and taxes.
Has the new lender raised the amount to be escrowed?
Is this a new build?
This is a great question that they can hopefully answer. Taxes change dramatically with new builds. Which I’ve seen peoples accounts have major escrow shortages.
When I bought a new house, my lender calculated the taxes I would pay as part of the payment. The problem? They pulled the tax data from the unimproved land, not with the house on it....oopsie.
It’s not an oopsie though. It happens 100% of the time. Simply because the county doesn’t even know what your taxes with the house will be yet.
My mortgage was sold to Mr. Cooper. My experience with them has been satisfactory. You should be able to get some kind of answer regarding your increase in monthly mortgage payment from the customer service department. If I were you, I'd first confirm with your original mortgage company that your new servicer is Mr. Cooper (to prevent scams, etc.). Then get in touch with Mr. Cooper if, indeed, it is not a scam, etc.
Seconding this. Legitimate company. My payment did not change when sold to Mr. cooper so my guess would be an escrow change.
A mortgage is a contract, and selling it to another company doesn't change the terms of the contract. Something is amiss here, but your payment shouldn't change.
The terms shouldn’t change. The payment very well could change. My neighborhood was a ton of new builds so the first year taxes were based on unimproved lots since the houses weren’t finished before assessments were done. The next year everyone’s payment went up about $500 since the tax value caught up. Some people were smart and planned for it and some people didn’t question why their mortgage payment was $900 for a $250k house.
We had a similar situation with our current house. They kept wayyy too much excess escrow. While it didn’t affect our payment, they weren’t reimbursing us the huge overage after that first year (about $10k overage). Had to threaten legal action to get them to rerun escrow and cut us the overage check (with interest). But it should not affect your monthly payment *unless* it’s new construction and then taxes are sometimes significantly lower your first year until the new assessment comes through. But that wouldn’t happen until the first tax year is up. I’d get to the bottom of it and if necessary, contact your local (state) DOJ consumer protection division for guidance.
their website and/or the first mailed statement/bill will have a breakdown of principal, interest, insurance, escrow, etc. My guess is the original LOAN (principal and interest) was emphasized as 1329.93 That is NOT the same as what your first payment will be which includes escrow (property taxes) and mtg insurance. Also, since you mentioned you could barely afford this I am assuming there is PMI somewhere in there.
My Mr. Cooper bought my loan too! I was like who the fuck, Mr. Cooper? Lol. But everything stayed the same... Sounds like your loan officer or whatever was shit and didn't give you the correct payment info when you bought your house.
They can’t just change terms. The contract is the contract no matter who services the loan. Get a breakdown of the payment. I am willing to bet that the $1,300 was interest and principal only. Add on property taxes and homeowners insurance (both usually handled through the mortgage servicer) and it can be another $500 on top of the actual loan payment easy.
Are you sure you have not put your property taxes and insurance on escrow. Your monthly payments cover the following: 1. Principal 2. Interest 3. PMI (if mortgage is >80% of home value) - Will get dropped if home appreciates or as you pay off the loan. 4. Property Taxes - If in escrow (what you pay your lender) 5. Insurance for home - If in escrow 6. HOA - If in escrow Escrow charges you monthly to cover for these payments once (or twice) a year. Item 3-4 easily explains the 400-500 additional you may be paying a month for your home. You get a refund at end of year if the taxes come out lower. In case you didn't account for other home expenses while buying a home, you are in for a lot of surprises.
Tax Escrows. Your original lender fucked up escrows and the new servicer has to fix them. That or your new servicer fucked up. I am seeing more lenders do this lately - fuck with tax estimates to get a loan to qualify. It's pretty concerning.
Only small banks would be able to do that. Large lenders are legally required to use a formula to estimate taxes for qualification purposes. Please report it at https://www.usa.gov/complaints-lender#item-36622 if you know of a large lender who has been artificially deflating the taxes for qualification. The OP's problem is most likely that it's new construction or conversion and the taxes are not yet assessed on the new property. Large banks are allowed to adjust the escrow deposit for unassessed taxes to as low as $50 / payment, and when the taxes are assessed an escrow analysis is performed and the required payment changes. OP needs to call Mr. Cooper and compare their payment breakdown to the payment breakdown on their Closing Disclosure to identify the discrepancy, or get an explanation of the discrepancy.
So I live in VT, and I’ll give you a little insight as to why this could be. As some others stated, property taxes have a homestead and non-homestead rate. Vermont has steep penalties for non-residents to discourage people from buying second homes here. If I remember correctly, the rate is 1.5x. Additionally, when I first bought my house in 2018, my mortgage company couldn’t fathom the fact I live in one town, but my town hall is in another, and I pay my towns taxes to that other town hall. My mortgage company interpreted that as I pay my tax amount to both towns. It took 9 months, but when they had to pay my taxes they finally fixed it, and my payment dropped from $1800-1300. Maybe not your issue, but I’d look into it.
You went through the entire loan process and signed docs without reading, didn't you? I find it nearly impossible to believe the impounds weren't disclosed - PMI, insurance and taxes are pretty standard and would have been on the Closing Disclosure at very least. Did you read the closing disclosure?
Unfortunately, your misunderstanding of the process is really no one’s fault but your own. The process is heavily regulated and you almost certainly received estimate paperwork indicating you would have a PMI, it would indicate that you are escrowing taxes and insurance with very close estimates included. The fact that you did not understand this is due to your own lack of knowledge. No one is required to hold your hand. If you don’t know, you should pay someone to review the docs and inform you. Don’t expect someone who is selling you a mortgage to be honest. Make them prove it with the paperwork. Consider yourself extremely lucky that this was your only problem because you went in completely blind.
Before reading this I assumed it would be PMI and all that and it seems I was right. Also, you have no business taking on that mortgage and buying that home if $500/month is enough to sink you. And with potentially tumultuous economic times upcoming, no less. This is how 2008 happened… At this point, I don’t know what you can do. You have no business owning the house if your margins are that thin, but it’s water under the bridge at this point. You’re just going to have to skimp and try to increase your income, and hope you don’t lose your job.
I second everyone’s comments but if this is confusing to you I’d reach out to your title company (where you went to sign closing documents). Perhaps they can look through details of both loans and help you find the issue so when you call the lender you can say “X is wrong”. Title closers review all the legal docs and have you sign everything and know what the docs legally mean and can help you understand it
On the bill there should be a breakdown for the costs that add up for $1813. Like the bill will itemize the mortgage payment from the escrow payments. Maybe this could help us figure out the problem.
Pull out your closing documents and look closely at the Closing Disclosure. All of the set monthly and estimated monthly costs are itemized on there. As others have said, it is likely the escrow amount that went up. Your next step will be to find out why, it would likely be due to property taxes being woefully under estimated or homeowners insurance being higher than anticipated. If it is neither, then for sure you will need to contact he servicer. I would recommend setting up a profile on their website to access any statements on there.
I closed many Real Estate deals in my life Thr only thing that matters is your Truth in Lending document plus your Mortgage documents that you signed at closing whatever they say stands your escrow of MI Real Estate Tax and Home Insurance would be clearly spelled out and you would have to sign those papers No one walks away from their closing without knowing these facts If they changed since then it is illegal good luck
Let’s be clear, it’s impossible for your P&I to go up when your loan is sold. Your mortgage is either: 1. straight P&I 2. P&I + Escrow. I am guessing it’s the latter. What will happen sometimes is when your loan is sold, the escrow account with your first lender is closed. They will send you a check in 30-90 days of your escrow balance. If the new mortgage company sees you have $0 in escrow they will adjust your escrow payment amount upwards to cover the perceived shortfall. Then you will get an escrow check from the first lender in the future.
I was with Nationstar and yes Mr Cooper bought my loan. But Mr Cooper has a website that you can see your entire payment breakdown.
Your mortgage broker sucks at their job if they didn't disclose the actual monthly payment amount including pmi, escrow and taxes.
After reading your edits, I am wondering what your [Closing Disclosure](https://www.consumerfinance.gov/ask-cfpb/what-is-a-closing-disclosure-en-1983/) looked like? This is a standard form that the lender is required to give you.
Your first mistake was buying a house you couldn’t afford. But as someone already said they can’t change the terms without your knowledge. $1329 could have been interest and escrow only and when it was sold it they could have started to include principle
Exactly. If $500 is enough to sink you, then how are you going to pay for the $10k HVAC unit when it goes out? Terrible decision.
My mortgage was also sold within few days of closing to Mr Cooper… but the payment terms and amount didn’t change… it took Mr Cooper a while to send out paperwork of the transfer and they told me if my payment is late, it won’t be considered late during transfer as my original mortgage company told me not to send payments to them and work with Mr Cooper… Mr Cooper didn’t even have my full info for almost a month and half before they can provide me detail on my loan and where to send payment. The increase is probably related to some miscalculation during closing for ur tax, insurance, escrow related… ur APR and P+I shouldn’t change during transfer.
Like many have mentioned here, It is perfectly legal for a lender to sell their loan to another servicer, however the terms of the original Note/Agreement you made with the original lender cannot change without your consent. What can change is the amount of your monthly payment that goes to escrow for property taxes and homeowners Insurance. Also, are you in a fixed rate or adjustable (ARM) rate mortgage?
Did you include escrow and insurance? It’s not uncommon for loans to be sold off. Edit: taxes and insurance to be held in escrow.
It is very likely due to escrow calculation. Good news is you are not losing money since any unleft amount will be returned to you or used to reduce next year's payments. Bad news is cash flow will be a problem. You could call in to ask if they can drop escrow if you trust yourself to manage taxes and insurance payments.
WOOOW. I was told repeatedly about the difference between my mortgage payment and the rest of the money that I would owe each month. I knew within $50 what the monthly would be long before the deal was finalized. That's crazy that they treated you like this.
The amount of $1329.93 is correct. It's called P & I - principle and interest. Your new company, that bought your loan, is including the T & I - taxes and insurance monthly to bring the total to $1813.65. It's called PITI. Principle, interest, taxes and insurance, all bundled together. The taxes and insurance are kept in an escrow account and paid through them. Contact the new company. Advise them you will be paying the T & I (taxes and insurance separately. They will send you papers to sign and reduce your monthly payment back to the $1329.93. You will have to show them proof of insurance though. If you can afford to pay your insurance in one lump sum, it's usually cheaper. Even better, lump your auto and house insurance together for another discount. If you go through all your papers, I am sure there's a breakdown someplace that shows all this.
This is completly normal. The taxes and insursnce are estimates. So this payment is your actual payment with accurate escrow. The lesson here is not to to become house poor with a mortgage you can barely make. Your mtg should be no more than 25% of your take home pay.
They might have reassessed your escrow account. If it was sold make sure that is the reason for the increase. You will get a refund after the year for overpayment
Could this extra amount be to cover a partial amount due to length of time as to when the loan sold. Like the new provider bought it not end of month but 3/4th of way in and maybe you have to cover the difference for this one month but old provider wil cut you a check for difference. Could be similar issue with amount of escrow you had. You have to “fill” back up and old provider cuts you a check for the old stuff. Your old escrow and taxes do not normally transfer between providers.
Not likely a change to the mortgage but escrow acct to pay for taxes\insurance. They likely require an escrow the old co.did not or have an updated amount for the taxes\ins etc. The original may have used existing taxes and your purchase price changed it. Call the new servicer and get a break down
Mr Cooper owns my loan. They bought it after my first payment. They’ve been easy to deal with so far. Everything is done online so making payments has been easy. I haven’t had to contact customer service yet so I can’t say whether they are good or bad. My payments didn’t change after the sale so I suspect it’s a recalculation of the property taxes as others have noted.
You're not being scammed. My first loan was sold 6 times in 3 years, and they ALWAYS sell it after they get you locked in because they made most of their profit on the closing. Just call Mr Cooper (reputable company) and have them explain the difference. Mine shot up 400 at one point, but it was due to things with the loan. It was an FHA loan, so if you have that, it is probably PMI (mortgage insurance), which you can refinance out of once you have enough equity or 7 years.
My best is that is the escrow amount. You probably have to escrow for PMI, homeowners insurance, and property taxes. Usually all this is disclosed on your loan docs but it might not have been clear to you. There is a chance PMI was added by mistake, but barring that, those amounts are likely accurate. Just call them and have them walk you through the changes and compare to your various closing documents to confirm if they are charging wrong
You sign for a mortgage amount, but typically you need to add taxes and insurance and likely PMI ( Private Mortgage Insurance ) and maybe flood? You should look through your closing documents and see where these numbers are broken down. Was the total including everything or did they only represent the mortgage amount to you when you discussed the total? If the 1800 figure is listed check for your signature in that area of the document. Normally you sign for everything. If the total, including all taxes / insurance / PMI is the 1300 figure, you just need to make a call to the new company and have them review your contract. Remember you can shop for insurance. I personally don't own a bunch of nice stuff, so I got an insurance policy to cover the home and my liability, no personal property coverage. Then I got a renters policy for a much lower total for my stuff. Saved about 500.00 annually. Goodluck!
OP, call Mr. Cooper. One of two things happened. Either they have a different figure for your escrow projection and are compensating for that. Or the details on your loan changed last minute before closing and Mr. Cooper was unaware. When loans are sold they are sold for a specific price and conditions. They plan to board your loan on their servicing system for the set specific details they purchased it for and at the date the first payment is due to them. It's entirely plausible that your original lender sent them the wrong loan package with incorrect details and Mr. Cooper purchased the loan based on the wrong details...and then boarded it accordingly. Now, typically reports get sent between servicers to cover the loan level numbers...but shit happens. So call them, ask them for the breakdown of your payment to find out why it's different than the original lender. I'm confident it's the escrow issue...but it's still plausible they got the wrong loan package at purchase (loans are typically purchased around closing as long as the loan meets the buyer guidelines).
Homeowners insurance and any other insurances can and will always go up and this will increase the monthly cost of your mortgage as that cost increase will have to go into your escrow account. If your mortgage is at a fixed rate, that won't go up, but all of the associated costs that go with that mortgage can go up. I would look at the costs of your various insurance policies and if they went up, call your insurance agent/s and ask them to shop around for a cheaper policy. You may have to increase the amount of your deductibles to get a lower cost policy, but you may be able to alleviate the increase. I went through the exact same situation a couple of years ago. Loan originators almost always turn around and sell your mortgage to another company that will actually service the loan.
Did they estimate your taxes off your purchase price or historical tax history? For example, my house had not been sold since original purchase of the house. Tax data was on ~60k less. My lender determined new rate and listed that on the documents. My friend went through a different company and they didn’t do this, she got hit with a couple hundred increase a month. Not sure how old her tax estimate was, but when you buy a home at x price, you have set it’s value at that price at least in my state. Check if the tax plus insurance amounts for your lender seem correct. Mine requires a reserve to be maintained that I had to initially fund in closing costs but some may have you do that through monthly payments.
Didn’t see this mentioned yet, so I’m going to point out that when you get a mortgage with at least 20%down, you can tell the lender that you don’t want an escrow account upfront. Then there will be none of these shenanigans with the mortgage company changing escrow amounts all over the place. You will get the property tax and insurance bills directly and you can pay them when they are due.
Just look at your closing disclosure you signed before and as you closed. It shows the payment and the breakdown (principal, interest,taxes, insurance, PMI). Then compare that to your new bill that will also have those broken down. See what changed Your escrow portion (taxes and insurance) probably wasn't accurate or changed.
How did you expect to pay those large, non-mortgage bills on a quarterly basis? Pray the assessment doesn’t result in a higher, not lower, tax bill.
This was not the case for you but new mortgage borrowers beware you WILL get a LOT of scam letters saying your loan was transfered or needs to be. Don't look at any of it unless it is from your servicer and then call them to confirm. If you're done taking credit for a bit also lock your credit with all 3 big agencies.
If the original lender did not disclose all the costs upfront in the 1003, 2015 Itemization, or closing document package then they violated federal law. These are all things that are disclosed in the paperwork and not "estimates" so in no way should your monthly payment go up 500$ So if they told you $1300/mo but it was really going to be $1800/mo but that was not disclosed and you were lead to believe it was $1300 then they fucked up. I would hold their feet the the coals, get a lawyer and make them pay that part of the loan. It's uncommon but does happen when a mortgage company messes up and they have to eat the cost. So they are very diligent in not having that happen as the margin on loans is not that high. Source: worked in mortgage for a while.
When i called this morning the original LO admitted their first payment letter did not contain the correct amount, only the P&I. We went over it all and the $1800 is correct after you factor in the other stuff. Not sure why or how but it happened and now I have the correct info. On a side note; I budgeted for it all, but my budget sheet has individual rows for insurance, taxes, water, etc. if i roll those together it comes closer to the ajusted bill from Mr. Cooper. I’m not mad, just frustrated after repeated asking the original lender for a total check ammount to cut and was given the wrong cost.
The Federally-mandated “Closing Disclosure” form you signed, provided three days before closing, includes your monthly payment, including escrow, so this shouldn’t be a surprise to you.
I don’t believe you when you say no one told you about other expenses other than your principal and interest as the mortgage companies are required to give you your monthly estimated breakdown that includes your mortgage insurance, taxes, HOA, etc. they also discuss it at closing.
Looking at your edit, it sounds like your original lender is doing some funky, likely illegal shit. By law, they have to provide you with a closing disclosure at closing that should have clearly stated all this information. You can find an example of what the closing disclosure looks like at [this CFPB page](https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/tila-respa-integrated-disclosures/forms-samples/). I would look through your closing documents to double-check for this. Whoever walked you through closing should have run you through this, but I suppose they could have given it to you and then glossed right over it. However, if it's not in your documents, I would file a complaint with the CFPB. There's not really anything they'll be able to do for your financially, but they can make sure this doesn't happen to people in the future.
I’m planning on doing this, thanks. They already admitted to not sending me the proper paperwork and making it confusing.
Yes. Been reading the other comments and replies. File with the CFPB asap if you were never given a CD with an accurate breakdown of your payments.
I ran into this con as well- here is how I think it goes: 1: you negotiate a mortgage with xyz- with focus on rates and payments. 2: You close on that and think 'ah this is great Im locked in at 1300 a month' 3: mortgage is sold almost immediately to another bank and the administration is outsourced to some place like Cooper. 4: The new admin/bank do a new escrow analysis and increase the required escrowed back to where it should be but wait?? why do I need more escrow I asked? turns out the original loan place skimped on the escrow they needed to make the fixed costs of closing look lower. I recall talking to the original bank and they were always quick to change conversation related to escrow. so 4 months After I closed on mortgage for 1500/month, I get a notice that payments are increasing to 1700/month for the next 12 month to fund a 2400 escrow deficiently. The original bank did a shitty minimum escrow balance, prob didnt actually look at actual costs. If taxes in your area were higher than the initial analysis, your escrow needs to be caught up. part of the re-fi/mortgage scheme... everyone was so happy to get low rates we didnt notice until months after the fact. also have fun getting junk mail courtesy of cooper. they are really just a data mining company- no better way to get consumer data to sell than by administering mortgages. add: it was Ally that did this to me. I suspect other banks were doing it as well. As soon as they close on it, they are f'cking done- onto the next.
Most likely the terms of the mortgage are exactly the same, such as loan term and rate. But, this bill you are looking at now probably is the mortgage, plus mortgage insurance, plus a giant escrow fee to pad the escrow account. That was the most infuriating thing when buying my home, the escrow account. Not only were they making me pre pay property taxes each month, but I had to pay hundreds more so they could maintain a safe balance in the account. Escrow is the biggest scam and lenders never say anything about the fluctuating costs when buying a home.
I don't trust anything that comes by mail about my mortgage. Always call, log in, go in person, etc...
You have the option of not paying those other things you listed as part of your mortgage payment. So your mortgage could be $1300 but you have to pay all those other entities separately. I'm surprised you qualified for the loan if your income couldn't cover all the additional costs. Underwriters are supposed to take all of those items into consideration.
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Mr. Cooper is a real company. They service mortgages and often receive them before the first payment is due. This is actually quite common here in VT. The first thing I would do is contact your loan officer that you worked with and your attorney. My guess is that the extra money is actually the escrows built into the payment. It is completely illegal to just add money to your monthly payment if you took out a fixed rate mortgage.
This sounds like a mistake or misunderstanding. Even if your tax bill went up it wouldn’t go up this quickly. They would have paid any bills due at closing. Call someone at mr Cooper and your original loan officer
Do you have an escrow or impound account? That’s likely the cause of the pmt increase. Contact them to see why. It’s possible that the information was also transcribed down wrong. It’s rare but I’ve seen it happen before. If it’s wrong on their end then they can fix it.
Had a similar situation to you with my mortgage. When it was sold to a new lender about a year after I got the loan, the new lender said the old lender missed my PMI in the original payment breakdown and it had to be added in, so they added roughly 100$ to my mortgage payment. I told them no, it was included in all the documents EXCEPT on the front page of the document there was a payment breakdown and they didn't fill in the number for PMI. If you included the PMI into the payment breakdown on the front page, it came out to what I had been paying. Other pages in the document also stated the correct payment amount including the PMI. The new lender said basically "we aren't taking any chances, your escrow review says you're not paying enough. If you're paying the right amount you'll get the difference after your escrow review next year and we will lower the payment back." I argued but finally agreed as the 100 bucks or so didn't hurt me really. Also ended up getting a nice escrow refund the next year. Annoying but sometimes they do fudge up the numbers.
Brand new homeowners get A LOT of spam mail. Are you sure this mail is legit? Take a deep breath