Escrow Shortage Possible Reasons

Increase on escrow disbursements

  • Previous taxes were assessed on unimproved property (new construction) 
  • Tax payee(s) not disclosed/discovered at closing 
  • Taxes were not paid for the previous year(s) 
  • Taxes were paid more than once a year and converted to yearly billing 
  • Additional parcels added 
  • Due dates changed for taxes and/or hazard (or other escrowed items) 
  • Lines were not setup correctly for taxes, hazard insurance, or mortgage insurance 
  • Additional disbursements for taxes, hazard, or other escrowed items 
  • Increase in insurance disbursement(s) 
  • Increase in tax disbursement(s) 
  • Changes to the (hazard) insurance policy causing the premium to increase 
  • Changing the carrier (or company) of the insurance policy at mid-term 
  • Lender placed insurance (LPI)
  • New Flood insurance requirement due to special flood zone change
  • Changes to the (hazard) insurance policy causing the premium to increase 
  • Changing the carrier (or company) of the insurance policy causing a new policy term
  • Not enough funds were collected at closing 
  • A refinanced loan didn’t have escrow funds transferred from the old loan