I haven’t blogged much about the financial complexities of homeownership so far, and for the most part, there really hasn’t been much to say about it. Sure, getting the mortgage was an ordeal that took many weeks and required mountains of paperwork — I wrote a bit about that here — but since then, it’s just been a matter of sending in the mortgage payment every month. Aside from having to pay our utility bills separately, which wasn’t the case at our last apartment, it hasn’t been much different than paying rent was.
Of course, what’s going on behind the scenes is quite a bit different. Instead of a single rent check that goes to the landlord, each month’s single rolled-into-one house payment has to go toward interest, the actual balance owed on the house, and an escrow account that automatically sends out payments for the homeowners insurance and property taxes.
The bank takes care of those last two things not to make your life easier, but out of their own self-interest: that house is the collateral on your loan, and if it gets burned down uninsured or seized by the government for unpaid property taxes, they’ll have nothing to foreclose on in the event that you stop making your payments. So instead of trusting you to send in those all-important tax and insurance payments, they take control of the matter by making your monthly payment a bit larger, stuffing that extra money into an escrow account, and using that account to make the payments for you.
Or at least, that’s how it’s all supposed to work. But something went very wrong somewhere along the line, and we ended up with a bill for $2700 in unpaid, overdue property taxes.
I think an unexpected bill that large would be enough to make anyone hyperventilate a little, and I even called my dad (the family tax expert) to make sure we didn’t have some horrible misunderstanding about how property taxes and escrow accounts are supposed to work. We concluded that our bank (Wells Fargo) was supposed to be sending in the payments for these taxes, but for some reason hadn’t. More specifically, when checking the escrow account balance online, we could see that the money had been deducted, but had somehow just never made it into the greasy hands of the county tax collectors.
So we contacted Wells Fargo, and learned that they had the wrong property ID number on file — it was off by one digit, so our payments were going towards the taxes on our neighbor’s house. You might think that would be a pretty easy thing for them to correct, but it was surprisingly difficult to find anyone at the company who could do anything about it. (It seemed like they had tons of people to sell you new banking products, but not as many to help fix problems with existing ones.)
For your entertainment, here’s a diagram I made showing how the whole “call Wells Fargo to fix the incorrect property ID number” thing went down. I put it together late at night and didn’t really bother to explain who’s saying what, so I hope it makes sense.
I think the thing that surprised me the most was how they kept trying to sell us more bank accounts. When you’re calling a bank to resolve a problem where they screwed up and literally sent thousands of dollars to the wrong place, giving them more of your money seems like the sort of thing that you’re just not that likely to be interested in that day.
Anyway, the diagram doesn’t completely cover the resolution process — we did have to call back a few more times after that to stay on their case, first to verify that the tax payments were going to be made (even with the corrected ID number they were a little slow about it) and then one more time to make sure that the escrow account would be refunded for the wrong payments. (As of this writing, the money is still nowhere to be seen, so it may take another phone call or two to finish getting this straightened out.)
And that’s the story of our property tax snafu, which I think I’m going to file away in my Hard-Earned Lessons category. The moral of the story being something like, “always keep a close eye on your escrow account,” or maybe, “never trust any bank to do anything for any reason, ever.”
Uncle Sam image from Wikimedia Commons.