HUH??

The title of this blog entry gets caps and two question marks because this one will just blow your mind...

We have to refinance our house. We have a balloon mortgage and at the end of a balloon mortgage you have to pay it off...so a refinance is usually the answer. I'm not thrilled about paying closing costs again, but we've had a rate of 4.625 for 5 years, so I'm not complaining!

We have enough equity in out house to not escrow for real estate taxes. This means we'll save our own money all year and pay the taxes ourselves. The alternative is we would pay 1/12 of our taxes every month to the bank, and they would send us our money back at the end of the year to pay the taxes.

The paperwork arrived to get the refinance started and the banker marked that we would escrow for taxes. I emailed the banker and advised we weren't going to escrow. She let me know that would be fine, but there would be a fee of .25% of the loan amount due from us at closing to do this.

HUH??

I've yet to receive a clear explanation as to how this is legal or ethical, but I've done checking all over the place, and this is indeed what banks are requiring when a borrower chooses not to escrow these days. I know why they are doing it...there's good money in babysitting all of our money all year, and if consumers don't let banks babysit their money, they lose.

.25%, for us, would be over $600. Now why on earth would anyone do that?

I'm dumbfounded and I'm angry about this. We work hard to maintain perfect credit, and we have more than enough equity in our house to make it worth the bank's risk to let us save for our own tax bill. If we don't pay our taxes, and the bank took our house, they would win, big time.

Hopefully I'll read about more people encountering this scam and being equally outraged. Not that misery loves company, but maybe someone else can figure out what the heck to do to put a stop to this nonsense!