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Lack of Escrow Accounts Hurts Subprime BorrowersAs financial regulators and Congress probe more deeply into delinquencies and foreclosures in the subprime home loan market, one contributing factor is receiving increased attention: the lack of mandatory escrow accounts.According to some industry estimates, most subprime mortgages closed during the housing boom years carried no escrows for property taxes and hazard insurance. That is in stark contrast to the prime mortgage market for consumers with good credit, where mandatory escrow accounts are routine. Escrow accounts are set up by lenders to guarantee the timely payment of property-tax bills and insurance premiums. On top of principal and interest charges for the mortgage every month, the lender also collects money to be paid when tax bills and insurance premiums come due during the year. In that sense, escrow accounts are a safety net for homeowners and lenders alike. When a borrower fails to pay real estate taxes, local governments can file liens against the property and force its sale to obtain the unpaid amounts. The lender then faces financial loss if the sale proceeds are not enough to pay off the mortgage. Escrows for insurance also are designed to protect the homeowner against loss in the event of a fire or other damage, and to cover the lender's security interest in the property. click here for complete article Property owners needing to sell their home, condo or building lot visit 888SOLDin9 to talk with our Jacksonville FL 888soldin9 partner about their personal financial situation. Our Jacksonville FL partner, Jim Tallent buys, sells, renovates and rents homes and properties in Jacksonville FL, Duval County FL and Northeast Florida. |