So in their records they may indicate the homeowner is delinquent when in fact the funds are sitting there waiting to be applied. Still, call the assessor's office and make sure the lender is receiving a copy of the delinquent notice. Also call the lender to alert him of the problem, says Wessel. In some rare instances, however, HUD may intervene on a homeowner's behalf. At least two firms will, for a fee, check to see whether a lender has been withholding too much in escrow, or whether he's been paying the proper amount in interest each month on the account.
State law determines whether a lender is required to pay interest.
In Illinois, no interest is required on escrow funds, reports Stanley Stewart, assistant general counsel in the state Office of the Commissioner of Banks and Real Estate . Mortgage Monitor Financial Services in Stamford, Conn. For those fees, homeowners receive an escrow analysis as well as verification that they are being charged the correct interest rate on their loan. Also, with fixed rate loans, when the mortgage contracts are sold between lenders, mistakes can happen. The new lender might input a wrong interest rate.