Possible to have a mortgage loan where homeowners ins. is not escrowed ?

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My sister has her mortgage with Bank of America. She swears she pays $ 40 a month for homeowners insurance – seperate from the mortgage check. I guess she sends State Farm a payment every month.
Have you ever heard of a mortgage where your payment is NOT included and escrowed?
Edit : Mikey loves to learn things………Thanks.
Edit : Mikey loves to learn things………Thanks.

My cousin and I were the remaindermen of a life estate and acquired the deed to a family farm in Iowa. However, the property has a mortgage on it (my cousin needed the mortgage for a loan to buy more acreage). Can I still petition the court to partition the land despite the mortgage?

Thanks!

12 Comments
  1. Reply
    Spanki
    February 10, 2011 at 5:10 am

    Yes they do exit …. Its common with subprime loans..

  2. Reply
    golferwhoworks
    February 10, 2011 at 6:07 am

    sure but in this day and age a little rare. In the sub-prime days that was common.
    I am a mortgage banker in TN & KY

  3. Reply
    btowntv007
    February 10, 2011 at 6:45 am

    Yes. This is common. You can also pay your property taxes by yourself too.

    A lot of people find it easier to put it in an escrow account, but some don’t.

  4. Reply
    Gem
    February 10, 2011 at 7:05 am

    Absolutely.

    I have owned 3 homes and only on this one have I escrowed both the payment and homeowner’s insurance.

    Can be done.

  5. Reply
    Donny
    February 10, 2011 at 7:59 am

    Yes, but you generally will need a larger equity in the property (+20%). Then most lenders (who are still in business ) will just loan money to you. Your best bet is to refinance IF you get a better rate of interest than you are currently paying and IF the value of the property you own has the required equity. One added benefit I’ve found is that you can again easily shop for a better rate on home owners insurance. The big factor of course is mortgage insurance – that nasty high cost life insurance policy most lenders require from their own bank. You can almost always beat that rate with a private insurance company.

    Good luck in your quest.

  6. Reply
    poobah
    February 10, 2011 at 8:02 am

    It is very common. I pay my insurance and property taxes separately.

  7. Reply
    curtisports2
    February 10, 2011 at 8:11 am

    I haven’t had my insurance escrowed for years. I haven’t had the property taxes escrowed since I re-fied six years ago. Banks will agree to this when loan to equity is below 80% – or they did, before the recent mess. Now they’re likely to be more cautious.

  8. Reply
    La Vie Boheme
    February 10, 2011 at 8:41 am

    I’ve always paid my insurance directly to my insurance company (Allstate)..I didn’t even know it could be escrowed. Are you sure you are not thinking about property taxes?

  9. Reply
    Slassy Girl
    February 10, 2011 at 9:06 am

    Yes, if you are putting at least 20% down you are not required to have an escrow account.

  10. Reply
    Larry C
    February 10, 2011 at 9:58 am

    This is pretty complicated. Talk to a farm attorney; perhaps the attorney who handled the estate, and who will be familiar with the issues. This is too complicated for a message board.

    In general, the property can probably be severed, but the Court will have to deal with the mortgage.

    If this is a $ 250,000 piece of land with a $ 50,000 mortgage; the mortgage company might well go along with a severance. In other circumstances, they may not go along with it.

    Their mortgage runs to the entire property; and they may not want to reduce their interest in it.

    I would talk to the mortgage company; and see if there are circumstances where they would not oppose the severance of the property; and then see if you can meet those conditions.

  11. Reply
    williambrown55803
    February 10, 2011 at 10:46 am

    It is a sticky situation, definitely contact an attorney. If you could re-fi the property they “might” let it be repartitioned if there is enough equity to release your part.

  12. Reply
    Expert Realtor
    February 10, 2011 at 11:08 am

    No, the mortgage would have to be paid off first.

    This not a complicated situation…this boils down to SIMPLE contract law.

    Banks loan on the entire property, not part of it. To change the legal description (which appears in the mortgage), voids the Note (b/c it has to match the property in order for it to be valid)…so that is why they won’t change it until it’s paid off.

    PS: I’m surprised that you permitted your cousin to take out a loan against the property you own with him…b/c in essence, he has encumbered the property to buy something else that you have no stake in.

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