What Happens after Receiving a Property Tax Reduction?
Congratulations: you’ve received a property tax reduction of $500 to $5,000… now what?
Mortgage Payment Impact & Government Regulations
The Real Estate Settlement Procedures Act (RESPA) limits the amount of money a lender may require a borrower to hold in escrow for payment of taxes, insurance, etc. The RESPA statute and regulations provide that lenders are capped in the amount of cushion they can require a borrower to maintain in their escrow account in the amount of one-sixth (1/6) of the total amount of items paid out of the account, or approximately two months of escrow payments.
Therefore, if you receive a reduction in the assessed value of your property, your mortgage servicer should reduce the amount of your monthly mortgage payment accordingly.
What If They Don’t Get It Right?
What should you do if your mortgage servicer is requiring too much money in your escrow account? RESPA provides that borrowers may make a “qualified written request” to their servicer, which they must acknowledge within 20 business days and must resolve within 60 business days by correcting the account or providing an explanation for its position. Unsatisfactory responses are grounds for a complaint to HUD.
The Department of Housing and Urban Development (HUD) has published some FAQs on RESPA regulations here.
Appealing Your Property Taxes with Kensington
If you choose to have us appeal your property taxes, we will provide you with a copy of the determination letter outlining the change in assessed value and a breakdown of the estimated savings as a result of the appeal. These documents may be used should you choose to make a “qualified written request” to your lender. Cook county homeowners: keep in mind that all property tax reductions are applied to your second property tax installment and that our determination letter may need to be adjusted to take into account any exemptions that apply to your situation. Our appeals processing team is here to work with you in order to make any such adjustments to your estimated savings calculations.