Friday, November 6, 2009

Homeowners Insurance Paid Through Escrow Account

Two weeks ago I received a check from our mortgage holder for an escrow overage. I didn't think much about it until the next day when I received a letter from my homeowners insurance agent saying that our insurance had not been paid and would be canceled in two weeks as we were already in the grace period time frame. This was the first time in nearly 30 years of home ownership that this has happened.

I called the 1-800 number on the escrow statement. The bank's representative assured me that the payment had indeed been made 1 day before it was due. Now I find this ironic since banks are notorious for telling you to allow for 7-10 days for payments to be processed. I can only assume now that they do not extend that same courtesy to those businesses that they pay. Maybe I should charge them a $49.00 late fee and tell them next time to make sure they allow ample time for processing.

I called my insurance agent just to make sure that the payment was received. She told me that, "yes, it indeed had finally arrived." She also said that this is becoming more of a problem. Seems that lending institutions are holding onto their (actually 'your') cash as long as they can. She said that Chase was by far the worst. Our mortgage is with Citizens Bank (originally Republic Bank) and Citizens recently failed the government stress test for banks. Ironically their CEO received a huge bonus as well as the former CEO who recently left. I sure hope their bonus arrived on time.

Moral of story....no matter how punctual your mortgage holder has been in the past about paying your insurance premium double check that it indeed has been paid on time. I have no faith in banks at all these days. But at least I can sleep easier knowing that the CEO received his bonus.