Escrow funds are often used to accumulate payments for yearly payments related to mortgages, such as tax and insurance payments. The complaint for this class action alleges that Santander Bank, NA, violates New York laws in not paying borrowers interest on these escrow funds.
When borrowers pay their mortgages each month, the payment often includes a portion of the yearly property taxes or homeowner’s insurance on the property. The mortgage lender or servicer takes these portions of payments and holds them in an escrow account until it’s time to make the tax or insurance payment. The funds accumulate in the escrow account and earn interest. Laws in certain states require that a certain amount of the interest be paid to the borrower who made the payments.
According to the complaint, New York’s General Obligation Law “requires a mortgage lender making a loan secured by a one-to-six family residence located in New York to pay the borrower a minimum of 2% simply interest for money received in advance from the borrower for tax and insurance that is held by the lender in an ‘escrow’ account until payment is due.” This is because New York considers the funds in the escrow account to be the borrower’s money.
The complaint quotes laws in Iowa and Utah and mentions that Connecticut, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, Oregon, Rhode Island, Vermont, and Wisconsin have similar laws requiring the payment of interest on escrow accounts.
The plaintiffs in this case, Daniel Tepper and Rebecca Rufo-Tepper, bought a single-family home in Westchester County, New York in August 2014. Their mortgage agreement requires them to make monthly payments to Santander for taxes and insurance on the property. However, the complaint alleges that Santander has never paid them any interest on the money retained each year in the escrow account.
The Multi-State Class for this action is all customers of Santander (or its subsidiaries) in Connecticut, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Oregon, Rhode Island, Vermont, Utah, and Wisconsin who (1) took a loan with Santander that was secured by a residence or cooperative apartment corporation, (2) paid money into an escrow account held by Santander to cover projected amounts for taxes, insurance, and other matters related to the property securing the loan, and (3) received from Santander less than the amount of interest owed under the law of the state where the property was located.
In the alternative, the complaint proposes a New York Class.
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
Santander No Interest Paid on Mortgage Escrow Accounts Complaint
January 20, 2020
Escrow funds are often used to accumulate payments for yearly payments related to mortgages, such as tax and insurance payments. The complaint for this class action alleges that Santander Bank, NA, violates New York laws in not paying borrowers interest on these escrow funds.
santander_mortgage_escrow_interest_complaint.pdfCase Event History
Santander No Interest Paid on Mortgage Escrow Accounts Complaint
January 20, 2020
Escrow funds are often used to accumulate payments for yearly payments related to mortgages, such as tax and insurance payments. The complaint for this class action alleges that Santander Bank, NA, violates New York laws in not paying borrowers interest on these escrow funds.
santander_mortgage_escrow_interest_complaint.pdf