State backs homeowners on tax, escrow changes

Md. officials, Realtors say lenders must shift to biannual payments

Time short for '99 refund

Real estate

April 22, 1999|By Robert Nusgart | Robert Nusgart,SUN STAFF

As homeowners find lenders balking at requests to change the way property taxes are paid -- and to refund excess escrow funds -- state officials and Realtors yesterday said consumers have the law on their side.

The General Assembly passed legislation that changes the method of paying property taxes from annually to semiannually, beginning July 1, 2000. In addition to lowering closing costs, the legislation has the side benefit of giving those with escrow accounts a one-time refund that would average $700 per homeowner, according to the Maryland Department of Taxation and Assessment.

Homeowners, under current law, can quicken the process and get the refund this year if they notify their mortgage lender or servicer in writing by May 1 that they want to change to semiannual payments -- an option permitted by Maryland law since 1995.

But some lenders are telling homeowners that they cannot change or that only the taxing jurisdiction can authorize a change.

"Clearly, they [mortgage servicers] have not been informed and perhaps have not been following current Maryland law. But we will consider it our responsibility to make them aware and to [make them] comply with the changes as well as the current law," said Mary Louise Preis, commissioner of financial regulation, the state agency that oversees lenders.

"Write a letter, sign it and say you want it changed by May 1," Preis said. "Don't let any stonewalling deter you from the deadline. Meet that deadline. The deadline is in the statute."

According to Joseph T. Landers III, executive vice president of the Greater Baltimore Board of Realtors, recalcitrant lenders need to be educated.

"We've been telling people to send your request in writing. Don't pay any attention to what the lender is saying, because under state law this is your option, not their election," said Landers, who added that the request must be made 60 days prior to when taxes are first due, which is July 1.

Landers said the law specifically states that any request is between the borrower and the mortgage servicer, not the taxing body.

Preis said that if consumers receive a "negative response" from their servicer or lender, to forward their request and the response to the commission at 500 N. Calvert St., Room 402, Baltimore 21202.

Pub Date: 4/22/99

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