Here’s something many homeowners are never told: your mortgage company could be holding extra money that belongs to you.
If part of your mortgage payment goes into an escrow account for property taxes and homeowners insurance, your mortgage servicer estimates how much those bills will cost. Because it is only an estimate, the company may collect more money than it actually needs.
That extra money is called an escrow surplus, and under certain circumstances, it must be returned to you.
What Is a Mortgage Escrow Account?
An escrow account is a separate account managed by your mortgage company. Part of your monthly mortgage payment is placed into the account to cover expenses such as:
- Property taxes
- Homeowners insurance
- Flood insurance
- Certain other property-related charges
Your mortgage company uses the money to pay those bills when they become due.
How Does an Escrow Surplus Happen?
You may end up with extra money in your escrow account when:
- Your homeowners insurance costs less than expected.
- Your property-tax bill decreases.
- The mortgage company estimated your expenses too high.
- You changed insurance companies and received a lower premium.
- A tax exemption lowered your property taxes.
- You paid more into escrow than was ultimately needed.
This is not free money or a government grant. It is money you already paid that was not needed for your actual escrow expenses.
When Must the Mortgage Company Refund the Money?
Federal mortgage-servicing rules generally require the company to review your escrow account once every 12 months.
If the review finds a surplus of $50 or more, the servicer must generally refund it within 30 days of completing the escrow analysis, provided your mortgage is current.
If the surplus is less than $50, the servicer may:
- Send you a refund, or
- Apply it toward your escrow payments for the following year.
A borrower is generally considered current for this rule when the servicer receives the mortgage payment within 30 days of its due date. If the loan is more than 30 days behind, the servicer may be permitted to keep the surplus in the escrow account.
What Happens After You Pay Off Your Mortgage?
If you pay your mortgage off completely, the servicer generally must return the remaining escrow balance within 20 business days, excluding weekends and federal holidays. In some circumstances, the servicer may apply the remaining escrow money toward the final mortgage balance.
How to Check for an Escrow Surplus
- Find your most recent annual escrow-analysis statement.
- Look for the words “surplus,” “escrow balance,” “refund,” or “amount being returned.”
- Compare what the mortgage company collected with what it paid for taxes and insurance.
- Confirm that the company has your correct mailing address.
- Check your mortgage account and bank statements to see whether the refund was mailed, deposited, or credited.
- Contact the mortgage servicer if the statement shows a refund that you never received.
What If the Mortgage Company Will Not Fix It?
Send the company a written Notice of Error or Request for Information. Use the special address listed on your mortgage statement or the servicer’s website—not necessarily the regular payment address.
Keep copies of:
- Your escrow-analysis statement
- Property-tax bills
- Insurance declarations
- Payment records
- Letters sent to the mortgage company
- Delivery or tracking confirmation
You may also submit a complaint through the Consumer Financial Protection Bureau if the company does not properly investigate or correct the problem.
One Important Warning
Never pay someone to “unlock” your escrow refund. Contact your mortgage servicer directly using the telephone number printed on your mortgage statement. Avoid giving personal or banking information to anyone who unexpectedly calls, texts, or emails claiming that they found mortgage money for you.
Your mortgage company reviews the account automatically, but that does not mean you should ignore the paperwork. Read your annual escrow statement carefully. That boring-looking letter could be connected to money you are legally entitled to receive.
Official resources:
Read the federal escrow-account rules CLICK HERE
Learn how mortgage servicers must handle escrow money CLICK HERE
information is provided for educational purposes and is not legal, tax, or financial advice. Mor tgage rules and individual circumstances may vary.
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