Understand Your Escrow Account
When we open an escrow account for your mortgage, we use it to make payments for real estate taxes and homeowners insurance on your behalf. To make those payments, we collect escrow funds as part of your monthly mortgage payment. This ensures that your bills are paid in full and on time, without you having to budget for these large payments separately. Use the information below as a guide to understanding how escrow accounts work, what happens when we analyze your account, how we determine your escrow payments, and what you’ll find on your statement.
Tax Questions (661) 847-4862
Insurance Questions: (661) 847-4872
Who pays my real estate taxes and hazard insurance?
If you do not have an existing escrow/impound account with Karpe, you are responsible for paying your taxes when they become due. If you have not previously set up an escrow/impound account and would like to do so now, contact our office at 661-847-4862.
If you have an existing escrow/impound account with Karpe, your taxes will be paid when due from your escrow/impound account.
Please refer to your Settlement Statement from closing to determine if you have an escrow/impound account established. You may also refer to your monthly account statement to determine if your monthly payment includes an escrow portion, or contact our office at 661-847-4800 to verify this information.
How escrow accounts work
What bills are paid from an escrow account?
We collect funds in an escrow account to pay:
- Real estate taxes
- Premiums for insurance required to protect the property, such as homeowners insurance
We do not collect funds in an escrow account to pay:
- Interim tax bills
- Homeowners association fees
- Premiums for non-required insurance policies, such as separate personal property insurance
- Special or added tax assessments
- Other fees that are not included in your real estate tax bill
- Supplemental tax bills
Do I need to send you my real estate tax bill each time it’s due?
We usually receive real estate tax information directly from the taxing authority. If we need you to provide it yourself, we’ll send a letter to let you know.
After I’ve paid off my mortgage in full, will you refund the money in my escrow account?
Your escrow account balance is applied as a credit on your account when your pay off payment is posted.
Where can I find more information account my escrow account?
Check your escrow account disclosure statement. We review your escrow account at least once a year, and we’ll send you an escrow account disclosure statement by mail after each review. The statement will show your previous escrow account activity, and projected future activity, including any changes to your monthly mortgage payment.
How we analyze and update your escrow account
What is an escrow analysis?
Each year, we review your account to make sure the escrow portion of your monthly mortgage payment covers your real estate taxes and insurance premiums, while also maintaining the minimum escrow account balance, if there is one. Increases or decreases in your annual tax or insurance bills may cause your monthly mortgage amount to change.
If bills paid from your escrow account before the escrow analysis were higher than expected, your account may have a shortage. If they were lower than expected, your account may have an overage.
After each escrow analysis, we’ll send you an escrow account disclosure statement by mail.
When will you conduct my escrow analysis?
We analyze all escrow accounts annually. We usually mail your analysis by October.
What is an escrow account shortage, and what should I do if I have one?
If the real estate taxes and homeowners insurance premiums that we’ve paid on your behalf were higher than expected, your escrow will have a shortage, which will appear on your escrow account disclosure statement.
You can pay an escrow account shortage in one of two ways:
Pay the amount in full by sending your payment along with the shortage payment coupon on your escrow account disclosure statement. Or, you can pay your shortage by phone by calling customer service at the number listed on the statement.
Pay the amount over 12 months, with 1/12 added to each monthly mortgage payment. We’ll do this automatically if you don’t pay the shortage in full.
I just closed my loan a year ago and now I have a shortage, what happened?
The real estate taxes and homeowners insurance that we’ve paid on your behalf may have been higher than expected. We may also have learned that there were past-due tax or insurance bills that weren’t paid at closing, and we’ve paid them on your behalf.
What happens if I have an overage?
If your account is current, we’ll send you a refund check if the overage amount is $50 or more. (You’ll see this transaction listed as an Escrow Refund on your account.) If the overage is less than $50, we’ll apply that amount to your first new monthly escrow payment.
Will you always refund an overage, or can you apply it to my future payments instead?
If your escrow account overage is less than $50, we’ll apply it to your first new monthly escrow payment.
We’re required to send you a refund if the overage amount is $50 or more. We can’t apply the surplus funds to future escrow payments, even if those payments are increasing.
Why does my account require a minimum balance, and how do you determine the amount?
A minimum balance helps ensure that if taxes or insurance premiums increase, your account can cover them without ending up with a large shortage. Minimum balance requirements are governed by federal law, or by your loan contract and applicable state law. The minimum balance is equal to two months of escrow payments (not including mortgage insurance).
Changes to your escrow payments
How is my monthly escrow amount determined?
To determine your escrow payments, we:
- Estimate the amount we’ll have to pay over the next 12 months for your real estate tax and homeowners insurance bills. We base this estimate on information from your loan closing documents, your taxing authority and insurance company, or your previous tax and insurance bills.
- Divide the estimated amount by 11 and add the result to your monthly payment.
- Determine whether any adjustments, such as shortage payments, are necessary to keep your escrow account in balance.
Will my monthly escrow amount ever change?
It may. We review your account at least once a year to make sure we’re collecting the right amount to cover your projected taxes and insurance premiums. If these payments increase or decrease, we’ll recalculate your escrow payment amount during your escrow analysis. This is separate from the calculation to determine whether you have a shortage or overage, so your payment amount could increase even if you pay your shortage in full.
Any changes to your escrow payment amount will appear on the escrow account disclosure statement you receive each time we review your account.
My real estate taxes or insurance premiums have gone down. Why hasn’t my payment?
To change your escrow payment amount, we need to conduct an escrow analysis, which typically happens on a yearly schedule. If you want us to recalculate your payments sooner, please contact us.
Why did my real estate taxes or homeowner’s insurance increase?
If you have questions about changes to your taxes or insurance premiums, contact your local taxing authority or your insurance company.
When I closed my loan I paid real estate taxes and insurance as part of my closing cost. Why are you collecting funds for bills I’ve already paid?
The tax or insurance payments you made at closing were for bills that were due immediately, or for the initial deposit to your escrow account. We continue to collect funds in your escrow account to cover future real estate taxes and insurance premiums when they are due.
Guide to understanding your escrow account disclosure statement
We review your escrow account at least once a year, and send you the results in your escrow account disclosure statement. Here’s a guide to the information you’ll find.
Account summary and contact information
At the top of your statement is a box highlighting mortgage and escrow account details. It also includes customer service information if you need assistance.
Q: Who do I contact in order to file an insurance claim, as my property has been damaged?
A:You must contact your insurance carrier’s claims department in order to file the claim. If you require guidance or assistance in filing the hazard insurance claim, you may also contact Karpe’s Insurance Department at (661) 847-4932 Monday – Friday 8:00 a.m. – 5:00 p.m.
Q: I just received an insurance claim check made payable to both myself and Karpe. What do I do?
A: We will be required to monitor the repairs and the endorsed check will need to be sent to the Insurance Loss Department along with the following documents so we can assist in monitoring the repairs.
- Contractor’s Proposal
- Insurance Adjuster’s Report
- Endorsed Claim Check
Without these documents we will be unable to process the hazard insurance claim check and assist in monitoring the repairs to your property. Karpe understands that this can be a very difficult time for you, especially after experiencing a loss to the property. As such, please contact Karpe’s Insurance Department at (661) 847-4932 Monday – Friday 8:00 a.m. – 5:00 p.m.
Additional Contact information
Karpe Real Estate Center
Attn: Loan Department-Insurance
8501 Camino Media, Suite 400
Bakersfield, CA 93311
Q: Am I required to have homeowner’s (hazard or property) insurance?
A: Yes. You must have adequate insurance to cover the structure against loss. Every policy has a section to list your mortgage holder as a loss payee. Karpe must be listed in the loss payee section. Per your signed Mortgage and Note terms, you are required to provide evidence of insurance upon request. If Karpe does not have proof of coverage, we will notify you that we need this information. Should you receive an insurance request notification, please contact your agent/carrier immediately and advise them to provide us with evidence of insurance, and to ensure they show Karpe as loss payee.
Q: Why is it important to have Karpe listed as the Loss Payee?
A: This is important for several reasons, which ultimately affect you the customer, your agent/carrier, and Karpe. In the unfortunate event that your property suffers a loss, the insurance carrier needs this information to ensure the repairs are completed in a timely manner. Each year your agent/carrier will send out the renewal policy to ensure the servicer of your loan has evidence of insurance. Finally, for escrowed loans where Karpe is responsible for paying the annual insurance premium, your agent/carrier must have Karpe listed as loss payee with the correct address to ensure that we are billed timely and payment is made to avoid policy cancellation. Please ensure that Karpe is listed as loss payee on your insurance policy as follows:
Karpe Real Estate Center
8501 Camino Media, Suite 400
Bakersfield, CA 93311
Loan # (Your Account Number)
Q: What if I don’t have homeowner’s insurance or don’t provide proof of coverage?
A: Per your signed Mortgage and Note, homeowner’s insurance is required. Therefore, if proof of continuous coverage is not provided, a policy may be obtained – at your expense – to cover the structure only. If you have proof of continuous coverage, click here to update your insurance information with our Insurance Department. You may also fax this information to (661) 847-4850. Please be sure to include your loan number. Please note that you may be able to obtain homeowner’s insurance at considerably less cost to you than the lender placed premium that may be assessed to your account. It is important that you realize that force placed insurance, although paid by you, affords you no coverage for the personal contents or personal liability coverage; it only protects the lender on your note in the event of damage to the structure. It is important to note that this insurance provides limited coverage, and typically at a higher cost, than a policy you obtain on your own.
Q: Am I required to have flood insurance?
A: If your property is located in an area designated by FEMA (Federal Emergency Management Agency) as a SFHA (Special Flood Hazard Area), you are required to have flood insurance coverage. You are also required to provide proof of continuous flood insurance coverage if your property is located in a SFHA. If Karpe does not have proof of coverage, we will notify you that we need this information.
Q: What if I don’t have flood insurance or don’t provide proof of coverage?
A: Per your signed mortgage and note, flood insurance is required if your property is in an area designated as a flood zone. Therefore, if proof of continuous coverage is not provided, a policy will be obtained – at your expense – to cover the structure only.
Q: What if I have my own insurance policy and a lender placed charge has been assessed to my loan?
A: Lender placed insurance is issued to cover a lapse period only when we have no record of other insurance coverage on file. Upon receiving evidence of insurance that covers that lapse, the lender placed coverage can be fully or partially canceled based on the evidence provided. Whether your loan is escrowed or not, all lender placed premium amounts are billed to an escrow/impound account, and any refunds are credited back to the escrow/impound account accordingly.