Latest news with #escrow
Yahoo
24-05-2025
- Business
- Yahoo
Escrow shortages are leaving homeowners with unexpected bills
It's practically an annual ritual for homeowners: Around February, a letter comes in the mail detailing the results of your latest escrow analysis. If your account comes up short, you'll have to pay up, either via a one-time payment or by spreading the sum over next year's monthly payments. Escrow account shortages are a poorly understood phenomenon in the US mortgage system, but they're growing more common. The accounts hold money in reserve for property taxes and homeowners insurance that mortgage servicers — the middlemen that handle payment processing — pay on a homeowner's behalf. Taxes and insurance costs are rapidly rising in much of the country, resulting in many homeowners inadvertently underpaying those expenses. When those bills come due, owners can end up owing extra money if their escrow account balance isn't high enough. What seems like a fixed mortgage payment can suddenly end up increasing, sometimes by over $100 a month. The shortage notices — and subsequent bill increases — come as a shock to many homeowners, especially those already stretched thin by high home prices and mortgage rates near 7%. 'A lot of people see escrow as, you just forget about it,' said Lisa Araujo, a loan officer at Redmond Mortgage in Guntersville, Ala. 'You're trusting that it's being taken care of.' 'We do need to talk about how taxes and insurance can go up as well.' Read more: How does escrow work when buying a home? Around 80% of mortgage holders have escrow accounts. They're mandatory for any borrower putting down less than 20% to buy their home or using any type of non-conventional mortgage. Homeowners who are eligible to go without one are responsible for paying taxes and insurance on their own. But while the accounts are common, they can be confusing for many homeowners. Lereta, a firm that provides tax services for loans, found in a survey last year that 28% of homeowners were somewhat aware or not aware at all that escrow changes could affect their monthly payments, and 53% of homeowners who received a payment increase were surprised by it. When a homeowner gets an escrow shortage notice, rising property taxes are often to blame. Home values have increased rapidly since the pandemic, strengthening owners' equity positions but also leaving them with steeper tax bills when their property values are reassessed. Some, but not all, states cap annual property tax increases, and how those caps work also varies. 'There are people who have had to give up their homes because of the appreciation they received,' said Mitchell Dunn, a Bowling Green, Ky.-based loan officer at Loan Factory. Escrow shortages are one form of what are sometimes referred to as the 'hidden costs' of homeownership, which include taxes and insurance, homeowners' association dues, and routine maintenance costs. Dunn counsels his clients to make sure their housing payment is below 25% to 30% of their monthly gross income, even though they may qualify for a bigger loan. 'That will allow you to prepare for that rise in your mortgage payment,' he said. With a fixed-rate mortgage, the portion of a payment that's applied toward principal and interest technically doesn't change over the life of the loan. The escrow portion is usually bundled with it into a single monthly payment. Dawn Miller, who works for the Montana Department of Revenue, has seen firsthand how rising taxes have become a growing burden for many homeowners after prices exploded in the state. In Great Falls, Mont., where she lives, the median home was listed for $414,000 in April, up from $253,000 five years ago. 'I've had people come into my office and cry at my front office counter,' Miller, 54, said. 'They don't know how they're going to pay a $2,000 tax bill.' Her own taxes have gone up, too, which added to her monthly payment before she canceled her escrow account. She purchased her home nearly eight years ago, and initially paid around $875 a month. By last year, her monthly payment was up to $1,040, even after she made a separate one-time $800 escrow adjustment payment. She had enough equity to opt out, so Miller now sets aside money for taxes and insurance in a high-yield savings account instead. Since she now pays those expenses separately, her monthly mortgage payment is down to $740. 'It makes it easier to budget,' she said. Read more: How much money do I need to buy a house? Escrow shortages can affect all types of homeowners, but mortgage lenders say they can hit those who recently purchased new construction homes particularly hard. It can take a tax assessor a year or two to recognize the value of a home that was recently built on a once-empty plot of land. That means new construction homebuyers often initially pay taxes based on their land alone, and then find themselves with a big payment increase when their property is reassessed after a year or so of homeownership. 'If you're buying new construction, you need to put money away,' said Jennifer Hughes Hernandez, a senior loan officer at Legacy Mutual Mortgage in Houston. 'You need to figure out what your taxes are going to be — what they're supposed to be — and realize that's probably not what's being collected in the beginning.' Insurance is also a growing burden for many homeowners. In recent years, insurance premiums have been rising far faster than the rate of inflation as climate change increases the frequency and intensity of natural disasters and makes it harder for insurers to make money. Homeowners facing a big escrow shortage may have luck lowering their payments by shopping around for new insurance, though lenders say it's important for them to understand what kind of coverage they're getting, as some cheaper policies may have higher deductibles or provide more limited protection. Araujo, in Alabama, also recommends keeping an eye on annual tax assessments and servicer statements. Miscalculations can happen, and assessors usually allow homeowners to file protests. Esther Thomas, a project manager in Huntsville, Ala., was shocked when she logged into her mortgage account and discovered a $3,600 escrow shortage on a home she purchased last year. But after further review, and several marathon phone calls with her servicer, tax assessor, and others, she learned that her taxes were miscalculated when she bought the home. She ended up receiving a check for $2,000. "It's so important to advocate for yourself," said Thomas, 33. "I didn't have $3,600 to give to anybody." But Thomas isn't rushing to spend the windfall. Knowing her costs are likely to rise in the future, she's setting aside the money for future escrow payments. Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance. Sign up for the Mind Your Money newsletter Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Coin Geek
22-05-2025
- Business
- Coin Geek
RBI scrutinizes select e-wallets after taxi app collapse
Getting your Trinity Audio player ready... The Reserve Bank of India (RBI) is reportedly reviewing certain digital wallets linked to electric vehicle (EV) services following the abrupt shutdown of BluSmart, the country's largest all-electric taxi platform. The collapse left thousands of users unable to retrieve money stored in the app's wallet, prompting concerns over the safety of funds in such closed-loop payment systems, according to a Bloomberg report. These wallets, which can only be used within a single platform, are common across India's expanding digital services sector, particularly in the EV space for tasks like booking rides or accessing charging stations. Unlike open-system wallets under the RBI's direct oversight, closed-loop wallets operate with fewer regulatory safeguards, making users vulnerable during business failures. According to the report, the RBI has begun informal discussions with EV charging operators and other app-based platforms to evaluate consumer protection measures. The central bank may soon convene a formal meeting with stakeholders to explore potential regulatory changes. One proposed measure includes requiring closed-loop wallet providers to place customer funds in escrow accounts—similar to requirements for payment aggregators—to ensure users can recover their money if a company ceases operations. The RBI is also considering applying elements of its Prepaid Payment Instruments (PPI) rules to large-scale closed wallets. A prepaid payment instrument (PPI) is a financial tool that enables users to load funds onto a card or digital wallet for future transactions. In India, PPIs encompass mobile wallets like Paytm, PhonePe, and MobiKwik, as well as payment gateways such as Razorpay. So far, the RBI has permitted PPI users to conduct Unified Payments Interface (UPI) transactions through third-party mobile apps, enhancing the scope of digital payment services in India. This means that users can transfer or receive funds through UPI in their PPI wallet using third-party apps, making it interoperable. BluSmart, once a major rival to Uber in India's ride-hailing market, halted new bookings despite operating the country's largest all-electric fleet of over 8,000 vehicles. Its suspension of services in Delhi, Mumbai, and Bengaluru sparked an online backlash. While some users reportedly said they received wallet refunds, others face a 90-day wait. The crisis deepened after Indian market regulator, the Securities and Exchange Board of India (Sebi), accused co-founders Anmol and Puneet Singh Jaggi of diverting loans meant for vehicle leasing to fund personal luxury purchases. BluSmart's reliance on corporate leasing—mainly through Gensol Engineering Limited, also run by the founders—has further raised concerns over financial mismanagement and transparency. While no formal regulatory action has been taken yet by the RBI, expanding oversight of app-specific wallets could significantly impact India's digital economy, where prepaid balances are widely used to promote customer loyalty and frequent usage. This is especially significant at a time when India, the fastest-growing large economy, expects its digital economy to grow almost twice as fast as the overall economy, contributing to nearly one-fifth of national income by 2030. This means that, in about five years, the share of the digital economy will become larger than that of agriculture or manufacturing in the country. Agriculture employs around 45% of India's workforce and contributes nearly 15% to its $3.5 trillion economy. In India, e-wallets—also known as digital wallets—are mobile applications or software tools that let users securely store their payment details for both online and offline transactions. Functioning like virtual versions of traditional wallets, these platforms allow for cashless payments, eliminating the need to carry physical currency or cards. The growing use of e-wallets in the world's most populous nation has played a key role in driving the shift toward a cashless economy, making transactions faster and more convenient for millions of users. PhonePe is a widely used digital payment platform in India, built on the Unified Payments Interface (UPI). It facilitates money transfers and bill payments and provides access to financial services like insurance and investment products. Google Pay (NASDAQ: GOOGL) has also emerged as a major player in India's digital payments space. It offers a smooth and secure interface for conducting UPI payments, whether online or at physical stores. Amazon Pay (NASDAQ: AMZN), integrated within the Amazon app, functions as a closed-loop wallet in India but is also accepted by several partner merchants, making it useful beyond Amazon's ecosystem. Other popular digital wallets in India include MobiKwik, Ola Money, and Airtel Money. These platforms enable quick payments, mobile recharges, and utility bill settlements. Watch: RockWallet is the go-to app for everyone title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="">
Times
17-05-2025
- Business
- Times
Frauds who stole £260k from Colin got me too, so I taped them
As the former managing director of a British investment company, with a master's in business from Harvard University, Joe considered himself an unlikely victim of an investment scam. But when the retired businessman received a call about recovering funds held in escrow relating to an investment he had made in wine trading, he became one of the nine million Britons a year who are duped by scammers. Joe, who asked for his full name not to be published, contacted The Sunday Times after reading about Colin Chudley, a 68-year-old mobile vendor who lost £260,000 and 'died a broken man' last month. Joe said: 'I am sure that I spoke to the exact same scammer just last week. I heard the voice of the scammers
Zawya
12-05-2025
- Business
- Zawya
Mbank provides AED Escrow Account Services to Changer.ae clients enabling secure and regulated Dirham to crypto conversions
Abu Dhabi, In a significant step toward bridging the gap between traditional finance and the digital asset economy, Mbank provides AED Escrow Account Services to clients enabling secure and regulated dirham to crypto conversions and trades executed at the platform. Through this service, customers can safely utilize a Dirham escrow account powered by Al Maryah Community Bank (Mbank), while all conversions between dirhams and crypto assets are executed by Mbank and have announced the launch of a unique Dirham-based crypto conversion service, including a fully regulated fiat escrow account in AED for crypto transactions. The announcement was made during TOKEN2049 Dubai, with Mohammed Wassim Khayata, CEO of Mbank and Board Member of and Wang Hao, Senior Executive Officer at in attendance. The Central Bank of the United Arab Emirates (CBUAE) has officially approved Mbank to open an AED Escrow Account for is a premium independent crypto custodian service and Virtual Asset Service Provider (VASP) licensed by the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM). This approval enables secure and compliant holding of AED funds in escrow through Mbank's digital infrastructure, while the conversion of virtual assets and stablecoins such as USDT and USDC into AED is carried out by For customers, this means they can confidently and immediately convert their digital assets into local currency within a fully regulated and secure environment, eliminating the uncertainty and delays often associated with fiat, in on-ramp and off-ramp transactions. The service is entirely online, providing fast, transparent, and seamless access to funds, and allows individuals and businesses to manage crypto-to-fiat flows with ease, backed by Mbank's trusted digital banking platform. The cooperation between Mbank and enables individuals to exchange supported cryptocurrencies and stablecoins into AED via with the converted Dirham funds held securely in escrow by Mbank. It also provides businesses with the tools to operate transactions entirely within a regulated, blockchain-enabled system, with real-time access to fiat and crypto balances. This escrow service supports Crypto to Dirham and Dirham to Crypto conversions executed by while the customers' Dirham funds and transactions are fully protected through the comprehensive regulatory compliance and by Mbank's secure technology infrastructure. Furthermore, this service facilitates fast movement of customer's AED funds, in and out, within the UAE banking system. In addition to the escrow service, Al Maryah Community Bank has received approval from the Central Bank of the UAE to provide Payment Token Services within the country. This new capability allows merchants to open accounts and accept payments through the AEC Wallet, further reinforcing Mbank's role in supporting a regulated and innovative crypto payments ecosystem in the UAE. Mr. Mohammed Wassim Khayata, CEO of Mbank and Board Member of stated: 'We are excited to offer this unique service to our customers, providing a seamless way to integrate Dirhams and crypto-related transactions with confidence. By providing AED Escrow Account Services to we ensure secure and regulated dirham to crypto conversions for Changer clients. This partnership with aligns with our mission to drive innovation in the UAE's financial ecosystem by offering regulated and secure financial infrastructure. The launch of this escrow account demonstrates the UAE's commitment to becoming a global crypto hub while maintaining the highest standards of security and regulatory compliance.' Mr. Wang Hao, Senior Executive Officer at said: 'At we are thrilled to bring this innovative product to the market in collaboration with Mbank. With the approval from CBUAE, we are enhancing our service offerings by providing a secure, reliable, and convenient way for customers to access crypto services. This product reflects our continued dedication to bridge the gap between traditional finance world and the rapidly growing world.' Mr. Tarek Soubra, Chief Technology Officer at Mbank, added: 'This new AED escrow account service is an exciting leap forward for both Mbank and By leveraging the safe and reliable crypto custody infrastructure and systems of developed in-house using the highest standards of security, reliability, and compliance without reliance on third-party Crypto custody platforms, and the seamless and straight through integration between the systems of Mbank and our customers benefit from a safe, fast, and transparent crypto-to-fiat experience. Customers can now convert their cryptocurrencies into AED through and then use their converted AED funds immediately and seamlessly, with Mbank holding the AED funds in escrow. Alternatively, Mwallet customers can now receive their converted AED funds immediately into their wallets and use them for any supported transactions or for immediate cash withdrawal, using Jaywan ATM card.' About Al Maryah Community Bank Al Maryah Community Bank is the first fully integrated digital bank in the UAE, providing an omnichannel experience for both individual consumers and small businesses. The bank is highly specialized, focusing on growth and serving the UAE community, which includes UAE Nationals, residents, and businesses (both SMEs and corporates). The bank's vision aligns with that of the UAE's leaders, who are committed to supporting individuals and small businesses within the UAE economy and fostering a forward-thinking culture that emphasizes innovation and technology. About Ltd is a global premium trusted crypto custodian service based in the United Arab Emirates and regulated by the Financial Services Regulatory Authority (FSRA) in the Abu Dhabi Global Market (ADGM). It is exclusively dedicated to safeguarding and managing digital assets by providing easy, reliable, and trustworthy solutions that help protect and grow crypto investments. With an interface built by experts in the field, combined with cutting-edge technology and advanced encryption techniques, a seamless, fast, and safe experience is guaranteed.
