Escrow

[beachmouse]

I suppose we could get rid of the escrow account if we raised a fuss, but ours is very good about timely payments (always makes sure we get the slight discount for early tax payment too) and will actually let us run a negative account balance if the insurance cost estimates were off for the year.

If anyone's buying a primary residence down here, I really can't say enough good things about Eglin Federal CU's mortgage division- very straightforward to work with, and they hold 99% of the loans they originate.

 

[SHELLY]

UBS Real Estate Securities Inc. v. New Century Mortgage Corporation, 07-50875, involves claims of breach of contract, conversion and breach of fiduciary duty against New Century, a mortgage lender. UBS is seeking an imposition of a constructive trust, an accounting and a permanent injunction.

In its complaint, UBS explained that it had entered into an agreement with New Century under which the mortgage lender "agreed to collect and deposit into a third-party custodial account borrower mortgage payments for the benefit of UBS, pending the repurchase of the underlying loans" by New Century.

But UBS claims that New Century failed to deposit millions of dollars of mortgage payments that it received from borrowers on loans purchased and owned by UBS, and did not account for missing escrow payments made by borrowers on loans purchased by UBS.

"As such [New Century has] misappropriated UBS's money and escrow money being held for borrowers," UBS said in its complaint.

Representatives of New Century were not available for comment.

 

[Mango]

UBS Real Estate Securities Inc. v. New Century Mortgage Corporation, 07-50875, involves claims of breach of contract, conversion and breach of fiduciary duty against New Century, a mortgage lender. UBS is seeking an imposition of a constructive trust, an accounting and a permanent injunction.

In its complaint, UBS explained that it had entered into an agreement with New Century under which the mortgage lender "agreed to collect and deposit into a third-party custodial account borrower mortgage payments for the benefit of UBS, pending the repurchase of the underlying loans" by New Century.

But UBS claims that New Century failed to deposit millions of dollars of mortgage payments that it received from borrowers on loans purchased and owned by UBS, and did not account for missing escrow payments made by borrowers on loans purchased by UBS.

"As such [New Century has] misappropriated UBS's money and escrow money being held for borrowers," UBS said in its complaint.

Representatives of New Century were not available for comment.

UBS Real Estate Securities Inc. sued New Century Financial Corp. on Thursday, claiming the subprime lender misappropriated millions of dollars from mortgage payments made on loans owned by the investment firm.

In the 14-page filing with the U.S. Bankruptcy Court for the District of Delaware, UBS claims New Century breached the terms of a contract that called for the subprime lender to buy back home loans sold to UBS under certain conditions, such as when borrowers default soon after taking on the loans.

UBS claims New Century and its subsidiaries had agreed to collect borrowers' mortgage payments and deposit them into a third-party account, pending New Century complying with its obligation to buy back some of its loans.

But New Century failed to deposit more than $3.8 million in mortgage payments that the company received from borrowers on loans purchased and owned by UBS, according to the complaint.

**UBS also claims New Century has failed to account for missing escrow payments made by borrowers.
**********************************************

**The last statement is rather vague.
Did this happen on loans that were not yet purchased by UBS in warehouse line or are they just saying, well we asked for New Century to repurchase defaulted loans (which is in every Bankers Master Repurchase Agreement) and they didn't deposit the money, so escrow monies were not deposited, (due to BK) therefore we have no accounting. There's a difference.​

 

[SHELLY]

**The last statement is rather vague.
Did this happen on loans that were not yet purchased by UBS in warehouse line or are they just saying, well we asked for New Century to repurchase defaulted loans (which is in every Bankers Master Repurchase Agreement) and they didn't deposit the money, so escrow monies were not deposited, (due to BK) therefore we have no accounting. There's a difference.

Here's my take on the scenario:

In its complaint, UBS explained that it had entered into an agreement with New Century under which the mortgage lender "agreed to collect and deposit into a third-party custodial account borrower mortgage payments for the benefit of UBS, pending the repurchase of the underlying loans" by New Century.

UBS had already bought the toxic loans from New Century and was in the process of having them REPURCHASE the loans.

But UBS claims that New Century failed to deposit millions of dollars of mortgage payments that it received from borrowers on loans purchased and owned by UBS, and did not account for missing escrow payments made by borrowers on loans purchased by UBS.

New Century was servicing the toxic UBS-owned loans while they were making arrangements to buy them back. New Century was supposed to "collect and deposit into a third-party custodial account" the principle/interest/escrow payments received from the borrowers of the UBS-owned loans--but they allegedly kept the money instead.


$3.8 million owed to UBS + the borrowers escrow payments are now MIA.

I'm sure UBS has a valid case against New Century. When it comes down to believing the accusations of one of the world's financial giants or those of some sleazy, bankrupt subprime lender....I'll go with UBS.


.



.

 

[Mango]

Here's my take on the scenario:



UBS had already bought the toxic loans from New Century and was in the process of having them REPURCHASE the loans.



New Century was servicing the toxic UBS-owned loans while they were making arrangements to buy them back. New Century was supposed to "collect and deposit into a third-party custodial account" the principle/interest/escrow payments received from the borrowers of the UBS-owned loans--but they allegedly kept the money instead.


$3.8 million owed to UBS + the borrowers escrow payments are now MIA.

I'm sure UBS has a valid case against New Century. When it comes down to believing the accusations of one of the world's financial giants or those of some sleazy, bankrupt subprime lender....I'll go with UBS.
.

Whose alledging that? Are you saying that you think they deposited the monies into their New century accounts to fund operations prior to BKtcy?

Sleazy mortgage Banker, I won't dispute that, but how stoopid of a move for UBS. You own loans in default originated with a subprime mortgage banker, and you hand them back to collect payments and pay out escrows when you haven't gotten paid back on the defaulted loans?

I am not sure if New Century had an actual loan servicing division or not, but most subprime lenders usually did not (in the old days anyway, and most subprime mortgages weren't even reported on credit reports) but if they didn't have a servicing division, even more ridiculous for UBS to hand off servicing on loans that have not been repurchased yet, especially when a banker may not have the capacity with software, etc. to wire escrow payments.

 

[Capricious]

"....even more ridiculous for UBS to hand off servicing on loans that have not been repurchased yet, especially when a banker may not have the capacity with software, etc. to wire escrow payments...."



Regardless, all this "should have been" does little to console those
who have paid into escrow and now discover that they must
pay their taxes and insurance a second time, even if only
temporaily.

Especially considering the insurance and tax rates in Florida.

Yet another reason one should maintain a high level of
"personal liquidity,"

i.e. keep plenty of cash on hand.

 

[Mango]

"....even more ridiculous for UBS to hand off servicing on loans that have not been repurchased yet, especially when a banker may not have the capacity with software, etc. to wire escrow payments...."



Regardless, all this "should have been" does little to console those
who have paid into escrow and now discover that they must
pay their taxes and insurance a second time, even if only
temporaily.

Especially considering the insurance and tax rates in Florida.

Yet another reason one should maintain a high level of
"personal liquidity,"

i.e. keep plenty of cash on hand.

For starters, Shelly is aledging that New century cashed the checks elsewhere and didn't deposit them. if UBS asked fror a buyback of defaulted loans, meaning borrowers had not made payments, I am confused as to where these people put in any money in escrows to start with.

What I am thinking is UBS came back to New century and said buy these back, and new century simply didn't have sufficient liquidity to do so since their warehouse lenders terminated relations, due to all the defaults that may result in foreclosure. So possibly New Century just decided to default on their Master Agreement which means they didn't accept payments on loans that were late on payments in lieu and just went Bk instead. In UBS lawsuit, they are suing because of that and included escrow payments in the bidy of the law suit not being accounted for since payments were not accpeted. That is how I am reading this.

if someone can provide an article or substantiate allegations that New Century actually cashed the money in another account, please provide.

By now, this should be common knowledge.

My fear with posting vague information is scaring the bejeebers out of people that escrow money is just disppearing, and people who are required to escrow just start mailing in principe and interest payments. If you are required to escrow, and do not want to anymore, you can request permission to have escrow removed and remit direct to taxing authorities. Whether it's allowed depends on LTV and State laws.
I know in New York it's illegal to require escrow if LTV is 80% or below and you can not be charged either at closing or post closing for escrow waivers.
However, your payments could be reported late if you are required and take it upon themselves to do it due to mass fear.

 

[spinDrAtl]

you can typically pay both insurance & taxes on your own - however, a lender will call this "riskier" b/c they don't have control & consequently will increase your interest rate. it used to be .25% in rate to waive escrows

This is untrue, at least in my experience. I have never seen an interest rate increased due to a borrower waiving escrow.

Conforming lenders require escrows at any loan to value over 80%. At loan to value of 80% or less, the borrow has the option to waive escrows for a FEE of .0025 of the loan amount. Loan of 100k = $250 to waive escrows.

Subprime lenders typically give the borrower a choice and do not charge any fees to waive because they are making up for the risk in their interest rate already. There are no pricing adjustments based on the borrower's choice.

There may be exceptions out there but this has been the case in 100% of the loans I have seen.

 

[SHELLY]

For starters, Shelly is aledging that New century cashed the checks elsewhere and didn't deposit them.

UBS is alleging New Century didn't deposit the checks.

I am not sure if New Century had an actual loan servicing division or not, but most subprime lenders usually did not (in the old days anyway, and most subprime mortgages weren't even reported on credit reports) but if they didn't have a servicing division, even more ridiculous for UBS to hand off servicing on loans that have not been repurchased yet, especially when a banker may not have the capacity with software, etc. to wire escrow payments.

New Century was in the loan-servicing business until they sold it off after filing bankruptcy. Some of the Sub-primates serviced their toxic loans after they handed them off allowing them to continue feeding at the trough.

My fear with posting vague information is scaring the bejeebers out of people that escrow money is just disppearing, and people who are required to escrow just start mailing in principe and interest payments.

I would recommend anyone who has the opportunity should always take responsibility for mailing in their own insurance and tax payments--after all, who is on the receiving end of the risk for non-payment?

I hope folks do get the "bejeebers" scared out of them--maybe it will cause them to drag out their mortgage papers and read all that fine print they didn't read at the closing table so they know where they now stand and take more care when they sign on the dotted line the next time. Forewarned is forearmed.


.

 

[Capricious]

"...My fear with posting vague information is scaring the bejeebers out of people that escrow money is just disppearing, and people who are required to escrow just start mailing in principe and interest payments..."




Yes, no one should worry about monies kept in "escrow:"

Escrow money is always safe.



http://stlouis.fbi.gov/dojpressrel/pressre06/mortgagefraud012606.htm

http://stlouis.fbi.gov/dojpressrel/pressre06/embezzlement030906.htm

http://stlouis.fbi.gov/dojpressrel/pressre06/mortgagefraudscheme030906.htm


(just in one local area)