In a huge win for consumers, the 9th Circuit. in Lusnak v. Bank of America ruled that the National Banking Act does not preempt California’s state escrow interest law, and consequently these banks are required to pay interest on impound accounts.
What Does That Mean For Consumers?
If your mortgage provider, or servicer, is impounding money ever month for property taxes or insurance, at the end of the year they must pay you the legal rate of interest set out in Cal. Civ. Code § 2954.8. If they are not paying you the interest deserved, it may well violate California law.
How Do you Know If You Were Paid Interest?
If your mortgage provider paid more than $10 in interest on your impound account, it was required to send you an IRS form 1099 INT. If you received this form early this year, you will be able to tell how much interest was paid on your impound account. If you did not receive the IRS form 1099 INT from your mortgage servicer, and you have money taken out each month placed in an impound account, you should do the following:
• Look for a year end Detailed History Statement. This document will show all amounts paid toward principal, interest and into an escrow account. Once you have obtained this, our office is happy to review this statement for you to ensure you received your proper amount of interest payment.
• If you cannot locate, or did not receive, a Detailed History Statement, call your mortgage provider and ask for one to be sent. Once received, our office is here to help you review your statement.
You are entitled to receive interest on your mortgage impound account and if you are not, we want to do something about it by enforcing your legal rights. If you have questions about this mortgage related matter or any other consumer related matter, please do not hesitate to contact our offices.
Phone: (800) 400-6808