As I have
said many times, the devil is always in the details. In the United States, if
you have a mortgage loan on your home, the lender keeps an escrow account for
you. They collect money from you each month. This money is used to pay your
property taxes and homeowner's insurance. It is convenient for you. It saves
you having to reserve money for these critical payments. It is great for the
lender because it protects their interests. They want to make sure that taxes
and insurance are all current.
A few days ago, my sister was upset
because her monthly charges for the escrow account had been increased hundreds
of dollars without justification. I urged her to hire a lawyer to protest this
arbitrary increase. Friday, I picked up our mail. There was a letter from our
mortgage company. They claimed that there was a shortfall in our escrow
account. They raised the monthly escrow withholding from $884.00 to $1,200.00.
This is strange. Our property taxes have not increased. Our insurance premiums
have not increased.
Then I saw the light! We have a disaster
in this country. Roughly 28- million families are able to keep their apartment
or house because of a moratorium on foreclosures and evictions. If this ban
fell away, we would see massive evictions and foreclosures. Politicians of all
parties grudgingly extend this moratorium a month or two at a time. With an
election coming up, no one wants to have thousands or millions of their
constituents on the street.
The mortgage companies are suffering a huge
loss in interest income. If they have to start a big round of foreclosures,
there is a fascinating statistic that I learned during the 2008-2010 financial
meltdown. Each foreclosure costs the mortgage company $50,000. Back in the last
financial crisis, these companies got bail outs from the US government. Such a
bailout is questionable this time. So, the mortgage companies are collecting
extra cash from those who can still pay to offset their losses.
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