Supplemental Tax Bill payments and Impound Accounts.

I'm getting quite a few emails from clients who purchased in Q1 and Q2 2019 and only now receiving their Supplemental Bill. This issue is not well covered / remembered when the purchase process started so many people are asking if their impound account can pay the bill. Yes.. and No.

If you want your loan servicer to pay all or part of the Supplemental Bill you need two things:

1) A copy of your Supplemental Bill
2) A copy of your 2019-2020 Secured Property Tax Bill. These are being mailed this week by the Assessors office.

Please note: Yes, there are funds in your impound account. Lenders are not allowed to over collect funds. Lenders are allowed to have a 2 month "Pad" of funds for unexpected bills, assessments, and or insurance policy changes. Those "pad" funds are not an over-collection. Every year the lender will re-calculate the amount they should be collecting for their impound account, usually on the anniversary of the origination of the loan. If there are excess funds, you can get them refunded to you if you wish, or you can reduce your monthly payment by the amount of the overcollection for the next 12 months.

In limited cases there can be an accidental over-collection within your impound account. It happens more often than not when the lender sets up a property tax base of 1.25% (common) when the base tax might be 1.05%. These funds may be available to cover a portion or all of your Supplemental Bill. With both bills in hand, call your loan servicer and ask to speak with the "escrow" or "tax" department, not the front line person unless they can confirm they are able to make these kinds of decisions. From there, once you get to the right person, they may ask for you to fax/email or simply read off the bill data. Once they have this information the lender can review if they have enough within the impound account to pay the Supplemental Bill. There might be, but there may not. It never hurts to ask.

I'm neither pro or con impound accounts. They are great for those who prefer them. They are not required in many cases for those who don't want them. If there are funds available, take this opportunity to use those funds for this often unexpected tax bill.

My .02c

do loan servicers collect interest on the money you're letting them hold on to for you? regardless, you could be earning interest yourself on the money you're happily giving to your loan servicer every month that's not due to be paid as much as much a year out.

Kings said:

do loan servicers collect interest on the money you're letting them hold on to for you? regardless, you could be earning interest yourself on the money you're happily giving to your loan servicer every month that's not due to be paid as much as much a year out.

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What's interesting is that loan servicers are required to pay a min. % of interest on your impound accounts.  The  % is higher than what most banks pay in this current low rate environment.

Servicers were at one time rmandated to pay interest on the funds they held but that requirement was gotten rid of several years ago.

My .02c

Yes I can confirm that we were not offered anything if we impounded.

Same for us, there was no interest paid to us so therefore we chose not to do an impound account since we saw no advantage to us.