Consumer complaint received 2021-02-18
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: PNC Bank N.A. (NJ)

Our mortgage loan dates from the initial closing on our apartment, XX/XX/XXXX. From the inception of our mortgage loan, our mortgage lender ( PNC Bank ) collected money from us for payment of real estate taxes and placed these funds in an escrow account. 

Taxes on our apartment are paid through a P.I.L.O.T. ( Payment In Lieu Of Taxes ) program. The P.I.L.O.T. reflects an agreement between the developer of the building and the local tax authority, and applies to all units in our building. There is nothing optional about participation in the P.I.L.O.T. 

For the duration of most of the first year of the loan, our mortgage lender failed to pay the P.I.L.O.T. We first became aware that our real estate taxes were not being paid sometime in the third quarter of XXXX. Around the time we first discovered that our property taxes were delinquent, we called the customer service number printed on our mortgage statement several times, but each time were directed to an automated system. This automated phone system informed us that property tax payments would be handled by PNC, and that there was no need to contact PNC about payment of property taxes. 

Eventually, we contacted a human being at PNC by phone. After describing the issue, to a customer service rep, we received a letter dated XX/XX/XXXX, stating that taxes paid from your escrow account were applied to an incorrect parcel by the tax office. We were further told in that letter that records with the taxing authority were in the process of being corrected and that our property taxes were current with no delinquencies. 

In a subsequent letter dated XX/XX/XXXX, PNC notified us that they had back-charged us and debited our escrow account for the late fees associated with late payment of taxes through XX/XX/XXXX, in the amount of {$1400.00}. This was the first time that PNC notified us that they considered P.I.L.O.T. payments to be our responsibility. In this letter, PNC told us that : " Upon further research, it was determined that the pilot taxes were homeowner responsibility, and as such, we have to pull the penalty funds in the following amounts [ totaling {$140000.00} XXXX from your escrow account to repay our corporate account. '' When we objected to this, PNC replied in a letter dated XX/XX/XXXX : " Per our research the Pilot Program was an incentive program given to the Developers to build in a particular area and then was passed on to the Homeowners as an enticement to purchase in the same area. It should have been explained at the time of purchase that this program would be your responsibility to pay as we were not made aware of the program unless the customer notifies PNC of the program. At that time, we can and will add it to the escrow to be paid with the property taxes billed. This program is not offered to everyone and therefore, PNC does not have a way of keeping track of these programs and who is eligible since it is not offered to every homeowner. '' Again we objected to their conclusion that we were responsible for the late fees, and received letters from PNC dated XX/XX/XXXX and XX/XX/XXXX stating that they were still researching our request. After a long break to allow for Covid-19 delays, we again contacted PNC in a letter dated XXXX, XXXX, XXXX. After no response to this letter we contacted PNC by phone and received a written response dated XX/XX/XXXX, this time stating that : " In our earlier research we have found that the PILOT bill was sent only to the customer and therefore not paid by PNC. We stand by our original decision and therefore will not be reimbursing your escrow account. '' We did not receive the P.I.L.O.T. bills for the period in question. We do not know whose fault it is that we and apparently PNC also, did not receive the bills, but we believe that by making escrow of the property taxes a required part of the closing, PNC needs to be the responsible party. 

As noted above, the P.I.L.O.T. program applies to every unit in the development, and there was nothing optional about participation in the program. The P.I.L.O.T. program is the sole way in which property taxes are collected for units in our development. Not only were we not informed by PNC that P.I.L.O.T. payments were our responsibility, but rather the Closing Disclosure for our mortgage loan spells out the amounts to be collected in escrow, which are equal to the P.I.L.O.T. payments. 

The Closing Disclosure goes on to state : " Escrow Account For now, your loan Will have an escrow account ( also called an impound or trust account ) to pay the property costs listed below. Without an escrow account you would pay them directly, possibly in one or two large payments a year. Your lender may be liable for penalties and interest for failing to make a payment. '' Each time PNC has contacted us to explain their refusal to pay late fees for tax payments that they failed to make, they have provided a different reason. We believe that, having taken responsibility for payment of real estate taxes at the time of closing, and as noted in their own Closing Disclosure, the mortgage servicer, and not us, should be responsible for payment of late fees.