Luxury Connect
Meet the Luxury Leaders | October 19-20 | Beverly Hills

DEAR BENNY: Can you explain how a bank can legally charge a quarter of a point of the loan to opt out of an impound account? We have always paid our property taxes twice a year and always on time and have excellent credit. It feels like extortion to me. --Jerry DEAR JERRY: It may not be legal extortion, but it's close. For years, lenders argued that it was necessary to collect escrows for taxes and insurance (also called "impound accounts") in order to make sure that the real estate taxes and insurance policies would be paid and kept current. This argument persuaded the feds to allow mortgage lenders this right. When Congress enacted the Real Estate Settlement Procedures Act (RESPA) back in the 1970s, it put a limit on the cushion that lenders could take from homeowners...