Bankruptcy

Wondering How Lenders Are Making Up for Missing Credit Card Fees? Check Your Home Escrow.

By Nathalie Martin

Following credit card reform, interest rates on credit cards have gone up, but this is not the only way lenders are making up for lost fees. My own home loan escrow was recently reset, and increased by $200 a month on a $1,450 loan. I saw similar things happening to clinic clients and decided to inquire. My taxes and insurance went up roughly $1,400 or about $120 a month. So what, I wondered, explained the extra $80 a month I was being charged? 

The gentleman I reached at my lender (and yes I did find a live body) was super-polite. He explained that the extra $80 was the ?voluntary? portion of my escrow. I asked why he called it voluntary.  He said this was the voluntarily portion because ?if you would prefer not to pay it, we will stop charging you for it.?

This begs the question of why anyone would want their lender to hold this money for them. Multiply this practice over millions of mortgages, and this really will help lenders? bottom lines. If you don?t want to help in this way, however, be sure to inquire and let the lender know.

Full post as published by Credit Slips on October 04, 2010 (boomark / email).