Do you own a home in New York State? Do you pay a portion of your property taxes or insurance when you pay your mortgage each month? If so, you may be entitled to earn interest on those funds.
And if Bank of America is your mortgage lender, you might really want to check on this.
Lenders often require that mortgage borrowers make these additional payments to them, rather than to the insurance company or property tax authority. This allows them to make sure that taxes and insurance get paid, so that the homes they’ve funded don’t go uninsured and aren’t the subject of liens. The lenders add the amounts to your monthly mortgage bills, hold them in an escrow account, and pay them once a year when they come due.
New York State law requires that, for homes with one to six units, occupied by the owner, or for properties owned by a cooperative apartment corporation, lenders must pay interest on the funds they hold. The minimum amount of interest that lenders must pay is either (a) 2%, or (b) the six-month yield of US Treasury securities, whichever is less.
This interest can add up. If you pay $1,000 a month toward property taxes and insurance, you may be entitled to as much as $200 in interest per year.
We have seen signs that Bank of America is not complying with this consumer-oriented law, and we’re investigating to see if a class action is needed. If you have a mortgage with Bank of America on a property in New York State, and if you’re not being paid interest on your escrow account, fill out the form on this page and let us know.