Our Nebraska home was destroyed by a tornado last April. The mortgage company said that our excess funds are held in an escrow account to ensure that the funds would be protected in case of a bankruptcy. They also advised that interest would be paid on the balance. We learned today that the interest rate they are paying is about .01%. Does Nebraska have any rules that provide market rate interest (money market rates are about 5%)?
Mike Engelmeyer asked 2 weeks ago 2 Answers
Scott deLuise Expert answered 2 weeks ago Hi Mike,
Unfortunately, there are no escrow interest rate minimums, and your repair escrow will be treated as a cash deposit earning minimum interest rates. The good news is that you’ll be paid something!
Insofar as a guarantee of funds if the bank goes out of business, you’ll need to verify that the lender is FDIC insured. If they are, you’re good up to the FDIC guarantee of $250,000. Make sure you’re escrow is insured by asking and getting the response in writing. Also check your Deed of Trust, which will outline exactly what your lender can do with regards to your insurance proceeds and excess funds; they may be required to give you these excess funds and not hold them in an escrow account.
Kindly, Scott
Chris Rockers Expert answered 1 week ago Hi Mike, I am unable to provide useful information as to interest rates applied by a mortgage company for funds held in escrow during the claims/repair process. Interest rates vary by state – and while the mortgage company is permitted to hold funds as a named payee in efforts to protect its interests, the homeowner has rights and understandably needs timely access to issue payments to the GC. However – I do not know an appropriate interest rate – the homeowners may wish to seek input from an attorney in the area if there are concerns for the conduct of the mortgage company and to better understand laws and statutes regarding market rate interest.
Kind regards, Chris
Please login or Register to submit your answer