Is Your Escrow Money Safe? Maybe Not.

You buy a home with an FHA loan. Every month, you pay not only your principle, but PMI (Private Mortgage Insurance), and property taxes. When property tax time comes around, the mortgage company takes the money you’ve been paying every month out of the escrow account and pays your taxes.

When you refinance a home, you still have to pay the taxes with your new mortgage company. We did this recently (more about my refinance next week). We paid almost a full year of property taxes with our new mortgage company, Bank of America. And we had a refund of almost the same amount due us from our old mortgage company, Taylor, Bean, and Whitaker.

Last week we received our refund. I deposited it into the bank. The bank held it for a few days and then made the funds available, so I transferred money to our Capital One 360 Savings account. This morning I woke up to an overdrafted checking account to the tune of $880.00. What happened?

The Taylor, Bean, & Whitaker Check Bounced

Apparently, the feds raided Taylor, Bean, & Whitaker on August 5th, a couple of weeks after our refinance closed. They filed bankruptcy on August 24th. Which leads to the question…what happens to the escrow money?

The very purpose of escrow is to keep funds safe, so they can be used for a specific purpose. In this case, the funds were to be used to pay property taxes. But since we refinanced with a different bank, and we paid property taxes into a new escrow account, the money should have been returned to us. And it should have been no problem, because the point of escrow is to hold money. The money should have been there.

So what happened to the money?

Colonial Bank is Shut Down by the Feds

Apparently Taylor, Bean, & Whitaker used Colonial Bank frequently. Mortgage payments were deposited there. Employees were paid from Colonial Bank. Sometimes from the same account as the mortgages were deposited into, according to NBC 11.

That doesn’t reassure me that my money and that of many other Taylor, Bean, & Whitaker customers was kept safe.

So the question remains: What happened to the money?

Taylor, Bean, & Whitaker’s Answer

I called Taylor, Bean, & Whitaker to find out what was going on. After being on hold for an hour, I finally got through to Ramona. Yes, she assured me, they were aware that checks were bouncing. The reason was that the bank they used had ceased and desisted. (Colonial Bank, perhaps?) But they are going to reissue checks from a new bank, I was assured. My new check should arrive in “a few weeks.”

So I asked the obvious question. “How long is a few weeks? Three? Six?” She told me two. I’m not holding my breath, but I’ll let you know if the check gets here…and doesn’t bounce.

So what is the fallout? And what happens to the consumers in the meanwhile?

The Consumers are Left Holding the Bag

I can’t speak for everyone, but I can tell you what life is like for us. First of all, we had 8 transactions bounce in our checking account with Chase this morning. Chase charges $25 for each failed transaction, for a total of $200. But they only charge for the first 6 transactions, I’m told, so the total is $150.

Chase told me they’d give me a one time courtesy credit of $70, which is the maximum they could give me. So I’m out $80. Fortunately payday is tomorrow, so we’ll be in the black again. Barely. My husband’s paycheck will be about enough to cover what we owe at this point, so we won’t be spending any money for the next few days at least. Fortunately we don’t have any bills due, and our pantry and freezer are stocked, so we’re fine. I think we have enough gas in our cars, too.

Since I had just moved the money over to 360 Checking, I couldn’t transfer it right back. We had a little extra in 360 Checking that should hit our bank account on Tuesday, so by then we should be OK.

I truly feel for those who don’t have an emergency fund at all and for those whose paydays are not tomorrow. As I was researching this morning, it seems that consumers with their taxes still held at Taylor, Bean, & Whitaker are unsure their property taxes will be paid at all.

It Makes Me Angry

Thousands of families in the United States work hard. We do the best we can to manage our money. We don’t bounce checks, even when money is tight. And when our money is put into an escrow account, we trust that it will be kept safe. And when a financial institution issues a check, we expect that it is good.

And in one moment, when a financial institution hasn’t performed ethically, and a bank is shut down, and a lender declares bankruptcy, the lives of hundreds of consumers are turned upside down. We’re left without our money, that we worked hard to earn. We’re left with overdraft fees to pay. Fees that are not our fault. We’re left wondering whether we’ll need to come up with another $1500 by November, so our property taxes will be paid.

We have to cut through the red tape. We waste an hour of our morning on the phone, just to find out where the money went. We wonder whether this is in any way covered by the FDIC. We wonder if the check we’ve been promised will indeed show up in the mail. And if it does, we wonder if it will bounce again.

I’m glad we’re going to be OK. We’re tight, and the next couple of months will probably be rough, but I know we’ll survive this. But I also know there are families out there devastated by this. Families who will be reeling from this bank failure for months to come. And my heart goes out to them.

Photo by Mike Licht,


By , on Sep 3, 2009
Lynnae McCoy I'm Lynnae, wife of one and stay-at-home mom of two. I'm committed to getting out of debt by being frugal with my choices in life.


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  1. AngryOwner:

    I tried calling the BOA ans FM numbers…no one called back. Nobody seems to care about this issue anymore. FDIC person told me to send a letter to TBW….as if TBW is going to jump on it and give me my hard $%@##@ $$$$. This is so frustrating….are we depending on a system that is so easy to fool and tempered.

  2. Nate:

    Help! Its been since Aug 2009…I have tried Jennifer from BOA, but no answer on that number.

  3. SHelley:

    We received a check fromTBW back in September of 2009 for overpayment on escrow account and after I deposited it it bounced! I called several times for awhile and got the run around. They said they would send my money as soon as judge released their funds. I still havent received anything!

  4. Danny:

    I got a packet in the mail today to vote for tbw’s bankruptcy plan.
    Anyone else get one?
    Are you voting in favor.
    It says there that I’m creditor category 8 “unsecured claims”.
    Any chance of ever seeing my escrow money ever again?

  5. Sherree:

    I’m still waiting on a refund for an escrow overage check. Anyone know who I can call to check into the status of my case specifically?

  6. Sherree:

    Hey everyone – Talk has died down a lot on this blog, so I assume most have been reimbursed. I’m wondering if anyone else is still waiting on their escrow check refund? Our check was for an escrow overage. We noticed our escrow was way high; TB&W conducted an escrow review, agreed they were holding too much in escrow, and issued a check for $1,500+. It, of course, bounced.

    I’m still getting all of the bankruptcy paperwork, but I’m not even sure what category I fall into for sure. The kicker is that, once the loan transfered to Cenlar, Cenlar said our escrow was low by $1,300 so we had to turn around and give what we never even really received to Cenlar. Good stuff.

    Anyone else still waiting on a replacement check for an escrow refund?

    • SHelley:

      Yes I am!

  7. Inge:

    Has anyone spoken to John from Freddie Mac recently? Have called several times and have not yet gotten a return call.

    • Phil:

      Hi Inge,
      Yes Ispoke with John felix twice this week. Feel free to give me a call an I will update you. I wish we could get a class action suit against Freddie Mac. I’ve spoken to two attorneys and they dont want to take my case as they feel it’s useless.

      Phil Grose

  8. Bonnie:

    On FB Taylor Bean page – – this was posted:

    Jeremy Herold . . . . . I got a letter from TBW also. It states that my loan is being transferred to BOA effective September 1st. My lawyer is working with BOA on the modification of whichever loan they decide to be valid. I will have my balance from last August b…rought current and my rate reduced to around 3.5% for 5 years then 5.5% for the remainder of the loan. Plus I have been banking payments since this began so I have thousands in the bank I can keep. Pretty good deal in hindsight. No mortgage payments for a year, then a lower fixed rate than I refinanced for originally (that got me into this mess). It has been very stressful though. I would wish this situation upon nobody. Still isn’t over. Getting there though.

    • Phil:

      That is awesome news!! I was told on Wed. by John Felix at Freddie Mac that letters would go out next week. When did you get yours? Are you saying you do not have to pay the 12 months or so payments that you’ve been banking and that BOA is bringing the loan current without applying the interest from 8/2009-9/2010? I have been banking the payments too , so I’d like to know. Perhaps I should speak to your attorney if he negotiated this for you.
      I’d appreciate your help as this mess has caused some stress on my part as well.
      Phil Grose

  9. Yvonne:

    Thank you Kristi and Phil for the feedback. Yvonne

  10. Kristi:

    John (Freddie Mac) 703-918-8935. Good luck!

    • Inge:

      I called and left messages for John at Freddie Mac last Wed., Thurs., Fri., and yesterday. I have never gotten a return call. I also haven’t had a reply to any of my recent TB&W e-mails. Our taxes and insurance are due November 1st, so I need someone to tell me how to proceed. Don’t know if I should pay or if Cenlar will like they did last year…’s been well over a year and no one has ever contacted us. Feel like all I ever do anymore is make phone calls about this mess. Have had two loans for over 13 months now.

  11. Yvonne:

    Does anyone have a contact for Freddie Mac re: a Taylor Bean to Taylor Bean refi that got stuck in the pipeline? It now appears that I have two mortgages–a new one with TBW and the old one that went to Cenlar. Cenlar told me Freddie Mac will make the decision. Thanks for any help. Yvonne

    • Phil:

      I have spoken to John Felix multiple times . A month ago he said we would have a letter notifying us the Freddie Mac is addressing our issue and that the letter would arrive by mid July.He said they were hoping to have the issues resolved by Sept. 1 and that each loan/mortgagee would be evaluated seperately. So far nothing which is basically par for the course for the last year!

    • Inge:

      We have the same issue – both a Cenlar (old) loan and a TB&W (refinanced) loan. Spoke to someone at Cenlar just this evening who said the tentative date for the net funded loans to transfer from TB&W is September. He said that we would only be held to the terms of the refinance. Checked my credit report, and the old (Cenlar) loan is shown as having a zero balance. The new (’09) refinance with TB&W is the one listed on my credit report – and is listed as current although we stopped paying June 1st and have been keeping the money in savings. Just this month I have been unable to access the TB&W website, did not receive a billing statement, and my emails come back undeliverable. The rep at Cenlar said that because they are getting ready to transfer they are shutting everything down. He also said to hold onto all payments and wait to make the loan current when it transfers…. also said to have proof of any payments that were sent to TB&W since September 2009. Praying this will finally be over next month!

  12. Jessica:

    The info is: Jennifer Dittrich at Bank of America’s Dallas office at 972-526-6435.
    She is extremely helpful and willing to help. She does whatever he can. I wish I would have called her sooner. After calling her, I had my check within 4-5 days. It was the best! Finally some results!
    Good luck! ~ Jessica

  13. Jessica:

    Finally got our check!!! If you need any help with Bank of America getting you a refund, call Jennifer Dittrich (her information is above). She is very helpful and was able to get us our refund. To think almost a year of dealing with this and the saga is finally over for us. I hope everyone on this site gets the peace they diserve from all this mess.
    Good Luck everyone. ~ Jessica, FL

    • kim:

      Hi Jessica
      I am in the sammmme place – out lots of money via escrow check that came and bounced. I saw the info for BoA – Jennifer – what number – can’t find it and or what department did you call. The bounced check put me in the rears and man it was hard to regain the black. I borrowed money from my mom and would love to pay her back…. thx

  14. Jen:

    Just spent another 3 hours on the phone trying to find someone to help me. I called F.M. they sent me to the F.D.I.C who told me they had no way of helping me and recommended I call Taylor Bean & Whitikar… My contact on Taylor Bean & Whitikar tells me to call F.M.
    so lost,frustrated, and angry. Emailed Taylor Bean & Whitikar again doubt it will help.

    • no_TBW:


      Call John at Freddie Mac (703-918-8935). A previous commenter posted his number. I’m not sure of you situation, please describe.

      But John should be able to find out.

      • Jen:

        Yes I saw that above and that’s one of the numbers I called before leaving my last post. No answer maybe he will get back to me. Thank You. My situation is like so many other’s I got my Escrow refund placed it in my bank and it bounced last August. They also reported me late THREE TIMES!! When I was NEVER late once. This is before they crashed. That was fun dealing with during the purchase of my new home. Anyways I am still waiting to be reimbursed on my escrow refund as well.

  15. Jen:

    Are the bounced Escrow refunds finally being paid??? I have been waiting for mine for almost a year now.. My story is just like the one above. I have contacted just about everyone and no one could help me. I have just about given up and just came across this page.

  16. no_TBW:


    I have a loan with Freddie Mac (although mine is stuck in the net-funded issue, which Freddie is working on now to have those loans transferred from TBW).

    I have talked to two Freddie lawyers already, but I’d like your contact with Freddie as well.


    • Kristi:

      John (Freddie Mac) 703-918-8935. Good luck!

  17. Jessica:

    Lucky you. I am happy for you. I have been doing the same thing you did for what seems like 5 months. I have gotten no where. I am in Florida. Our check was written to our previous insurance company. I have provided copies of this “returned: non-sufficient funds” check to them 3 times with a copy of my statement from TBW which shows it being subtracted from my account. This check was written 2 days before TBW was shut down. Gotta love it.
    I think I’m going to change my posted name to “getting no where in FL”. I keep running in circles. Has anyone gotten anywhere with anyone from BoA in Florida? Does anyone have any advise for me?

    • Kristi:

      I have the number for the man at Freddie Mac who is releasing the funds (if your loan was via Freddie Mac). Let me know and I will post it…

  18. Kim:

    Yeah! I finally got my check from BOA. I called them on Thursday 6/10 and was advised to fax a copy of the bounced check and my bank statement to their research department. I faxed them a copy of the bounced check, on Monday the 14th and they mailed out a new check the same day. By the way I live in Utah. Thank you to all the posters on this board for your advice! Good luck everyone!

    • Kristi:

      Oklahoma finally got her check!!!

  19. Mary:

    Yay! I received the check on Friday. It’s almost surreal. It has been such a long year. I really hope everyone else gets the closure they need on this bad chapter in our lives.

  20. Matt:

    No check today : ( maybe tomarrow

  21. lucy:

    So glad they finally indicted Farkas!!! ITS ABOUT TIME!

  22. Phil:

    Well the big HEADLINE today is former CEO of TBW gets arrested for fraud. It’s pathetic how that gets headlines and no mention about the ten’s of thousands of us common folk who are out money.I’ve been trying to get a reporter from a major paper to pick this story up and not getting any where. Who cares about Freddie Mac losing money…….

  23. Matt:

    No check today :(

    • kristi:

      Matt, I am still waiting too. My loan was via Freddie Mac, although it was a conventional loan, and was transferred to Cenlar. If your situation is the same, I was told funds would be sent to Cenlar this week and hopefully should have a check by the end of the month. I have been told many different stories so I am not holding my breath but am hopeful.

  24. Matt:

    no check in the mail today :( <——– sad face

    • kristi:

      Matt, what is your story? Was your check on Platinum Bank? Who was the actual lendor? If you can give us some details we can get you some info.

  25. Gary:

    Got a BAC check today for the amount of the Platinum bounced check. Only took 10 months.

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