If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

This is a real Scooby Doo moment.

American Home Mortgage, the bankrupt Long Island lender, is said to have bounced property tax checks in 3 states. Maryland, New York, and Washington are reporting that property tax checks from American Home Mortgage escrow accounts are bouncing which is a huge problem.

When people prepay their property taxes to the mortgage company the funds are supposed to be in escrow accounts. These accounts are outside of the normal business funds and are supposed to be safe for all parties. Even bankruptcy courts can not touch the funds. The only time money is to be removed is to pay the taxes on the property.

Now checks from these escrow accounts held by American Home Mortgage are bouncing and there should be no reason whatsoever for this to happen. If the funds that were payed by the borrowers for the taxes were not put into the escrow accounts there could be serious legal liability for American Home Mortgage and their officers.

Lets hope this is a glitch and not a full scale problem. The last thing these borrowers need to do is try to come up with tax money they have already paid to save their homes.

The Maryland Commissioner of Financial Regulation filed an inquiry with American Home Mortgage on Friday. Melville, N.Y.-based American Home Mortgage has five days to respond to the letter, said Joseph Rooney, the deputy commissioner for Maryland’s financial regulator.
Officials in New York and Washington state are also looking into bounced checks there.
Mortgage servicers typically collect property tax payments each month with a borrower’s mortgage payment. The property taxes are then placed in an escrow account and held until property tax bills are due. Because they are placed in an escrow account, funds should always be available to make the payments. via Yahoo! Finance.

Related posts:

1. HomeBanc Bouncing Checks To Georgian Attorneys
2. Failure To Escrow SubPrime Another Nail In Borrowers Coffin
3. American Home Mortgage Facing Liquidation
4. New Jersey To See Higher Property Taxes Because of Slowdown
5. Making the Seniors Work To Pay Off Property Taxes - Your Bloodsucking Government in Action