And now I have late fees. Who's responsible and what course of action should I take?

are you talking about your lender's escrow? Do they require you to escrow your HOA fees and they pay each year?

Or are you talking about at closing when you bought? Did your contract say fees would be prorated and paid at closing? Did your closing statement reflect this and then title company didn't pay?

Unfortunately, I am 98% sure you are still responsible. You have to make sure your lender pays them.

Do lenders typically pay HOA dues?

We don't typically escrow for HOA dues at my location (only property taxes and insurance), but we don't do a ton of escrowing.

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Or are you talking about at closing when you bought? Did your contract say fees would be prorated and paid at closing? Did your closing statement reflect this and then title company didn't pay?

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I'm talking about the escrow that we set up at closing.

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Do lenders typically pay HOA dues?

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Maybe they don't and I'm wrong. I guess I'll have to call tomorrow. I was led to believe at closing that this would be covered in my monthly mortgage payment.

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Unfortunately, I am 98% sure you are still responsible. You have to make sure your lender pays them.

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Yeah, I figured I'd legally be at fault even if I wasn't necessarily responsible for them being late.

Thanks for your help.

Just for the record, I wouldn't take my word for anything in regards to escrowing.

We typically escrow only for property tax and insurance, but again, my primary business is not home mortgages. Also, we are a community bank, so on any mortgages we do hold (not many), we don't even require escrow. This is obviously different than the situation most people face with typical mortgage companies.

Double post-

You should've been given a escrow statement at closing that showed the monthly collections, a balance of the escrow fund, and payment of the expenses out of that fund for the upcoming year.

See if you can find that in your closing docs. I believe it is simply called an "Escrow Statement" but I could be wrong. It should paint a clear picture of all the money that was anticipated to go in and out of the escrow fund.

No matter the situation, you'll have to pay the HOA fees now, but you could (and should) press the lender (perhaps with legal action) to reimburse you for those (and the late fees) if they indicated in the closing docs that they would collect for them and pay them.

Good luck and keep us updated.

[This message has been edited by BaylorGuy314 (edited 2/22/2009 10:41p).]

An important question... how much are the late fees?

yeah, like Baylor said, many banks don't require you to escrow your HOA fees - just taxes and insurance.

In any event, it should have been made clear at closing if you reviewed your loan documents. Did your lender or mortgage broker attend your closing? If not then the person handing you the documents to sign at closing was the title company's employee (who has no affiliation with your lender) and that person really shouldn't be explaining your loan documents to you (in fact, many lender's instructions to title companies prohibit closers from explaining documents). Any questions about the documents (such as "does this escrow cover my HOA fees?" should have been directed to your lender.

Without actually seeing your loan documents, I can't really say for sure, but I would be willing to bet that EVEN IF the lender required you to escrow your HOA fee, you still most likely signed documents that said you were responsible for making sure that the various escrow items were in fact paid. So strangely enough, the fact that your HOA fees are now unpaid and past due, you may actually be in default on your loan.

Yeh in my documents.. there is an 'estimated monthly payment.' which includes escrow, mortgage, and HOA fees..
However, below this, clearly labeled, it says, HOA fees will not be included in monthly payments.

In otherwords, I pay them seperate. They include it in the total monthly payment just so you know how much you should save a month to pay at year end.

Escrow NEVER pays HOA fees. Never.

At least I have never seen that in six years in the mortgage business.

You use the monthly (prorated if necessary) to calculate debt to income, and total payment, but that is just a loan qualification issue. So you see it in the loan paperwork but not in actual escrow calculations.

"NEVER"??

When we were getting pre-qualified through USAA, I'm 99% sure they said that HOA fees were included. (We went w/ a different lender and did NOT escrow HOA fees).

How much is your late fee? Couldn't be more than $30-$40...

Lenders typically escrow for things that could put a superior lien on the house in front of their own.

For example, don't pay your taxes and the state has jurisdiction to place a lien on the house for those monies in front of the lender. Thus, the lender escrows for those to protect themselves.

Insurance is a bit different, but that one is fairly obvious- if the house burns down or there is a flood, etc, then the lender wants to be covered. So they escrow to protect themselves.

I don't see how or why a lender would require escrow on HOA because I can't think of any situations where the HOA has the ability to take a lien on the property ahead of the lender or would put the lender's collateral in a compromised position.

Of course, I'm thinking of dirt here and not condo developments. I can see how a condo would be different.

Nevertheless, there indeed may be some HOAs out there that have that authority.

Now, don't get confused with getting preapproved with HOA dues and the lender escrowing for them. They preapprove you with HOA dues included because it is something that you'll have to pay (monthly or annually). So, in essence, it's part of your monthly expense of owning.

That being said, just because they include it in your prequalification doesn't mean they escrow.



[This message has been edited by BaylorGuy314 (edited 2/24/2009 9:12p).]

Glad I don't escrow...I like being in control of my own money

Plus, I pay my $300+ in HOA dues from the interest I make from my tax/insurance savings.

[This message has been edited by slschultz02 (edited 2/24/2009 10:10p).]

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I don't see how or why a lender would require escrow on HOA because I can't think of any situations where the HOA has the ability to take a lien on the property ahead of the lender or would put the lender's collateral in a compromised position.

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Most HOA fees are subordinate to the lender's lien but this has to be set forth in the HOA documents. Lenders will typically require the title company to verify that any lien created by HOA fees are subordinated to the lenders purchase money lien (an in almost every case, the HOA covenants expressly state this).

[This message has been edited by unmade bed (edited 2/24/2009 11:23p).]

Shultz - Where are you putting your money that you're getting $300 in interest annually on just the taxes and insurance premium?

^^^^
If you have a $1,000,000 house, and your taxes are 5% ($50K), you'd have no problem getting $300 in interest for the year...

it's all relative.

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When we were getting pre-qualified through USAA, I'm 99% sure they said that HOA fees were included. (We went w/ a different lender and did NOT escrow HOA fees).

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Read my post right above yours.. USAA puts HOA fees in for estimated monthly payments, for qualification purposes, but they DO NOT collect them. I used USAA for my refi.


[This message has been edited by metaltim (edited 2/25/2009 3:27p).]