Your mortgage payment is usually a PITI payment. PITI stands for Principal, Interest, Taxes, and Insurance. When you make your payments each month, the "TI," or tax and insurance portions, are saved in an escrow account.
When your homeowners insurance renews, or your property tax bill becomes due, your mortgage lender makes the payment from your escrow account.
If there's not enough money in your escrow account to pay the balance, usually your lender will advance the funds to you. Then you're given an option to repay the shortage, or accept an increase in your mortgage payments to repay the difference.
Since these bills typically increase in small amounts year after year, your mortgage payment probably increase a little each year.
What Does Coronavirus Have to do With Your Escrow Account?
If you've accepted a 3 month forbearance in mortgage payments, you're also not depositing those 3 payments into your escrow account.
When your property taxes become due, and your lender pays the bill, you will promptly hear from them to remedy any shortage and prepare for next year's increase.
If you can't afford to remedy the escrow shortage, your bank may be able to begin foreclosure proceedings.
How Can You Pay Escrow Payments Only?
The best way to make an escrow-only payment on your mortgage is to mail a check with your statement stub. You can indicate that this payment is for "ESCROW ONLY." Take a picture of it, or scan it, before you mail it so you have proof.
You may be able to make an Escrow Only payment via your usual method, whether it's online or calling in by phone. Make sure you tell the representative that you want the payment applied to your escrow account and not principal and interest.
What Will Happen After My Coronavirus Forbearance Ends?
We don't know yet, but you may be forced into a repayment plan or loan modification application.
If you have a federally-backed loan, you may be able to add the payments to the end of your loan, or request an extension on your covid19 forbearance every 3 months. Just keep in mind that if you're back to work and can afford your mortgage, you may want to resolve the delinquency sooner rather than later.
If you keep extending your forbearance, that's more payments that are past due, and more payments that eventually have to be repaid.
If you're facing foreclosure, or ready to apply for a loan modification, speak with our attorneys to learn what your options are.