This is the first time I've seen the mortgage default get generated by an escrow issue. The banks have done a lot of under-handed things. This one's a little different than most though.

I believe there is something deeper going on with all of the foreclosures. It doesn't make sense that the banks wouldn't try a little harder with people that are just going through a difficult period. They've already got plenty of foreclosures they're sitting on that they can't put on the market. Yet, I hear stories of the banks refusing to work with people on a myriad of problems.

This legitimately sounds like an administrative error (probably done deliberately by the originator of the mortgage). In US Banks defense, escrow shortages are legitimately money they have to come up with so I understand why they went to the homeowner. The monthly payment difference the homeowner cited would be about the 3K that the bank said the escrow was short.

Had the homeowner been able to make the larger payments... in about a year they would have probably gotten a refund check for a portion of it. My guess, part of this was to take care of a previous shortage and part would be to cushion against a future shortage. The way the escrow analysis is done, it's not at all unusual to get a demand for payment for a shortfall or to have your payments increase accordingly and turn around a get a check from the bank a year later.

For anyone who thinks that by having a fixed rate your payment will never go up... you are always subject to increases for escrow, which covers your property taxes and property insurance. When your taxes and insurance are taken care of by escrow, it's real easy to forget to review the annual statement from your assessor and contest it if the value is wrong. Don't forget, you can and should still compare rates on your homeowners insurance once in a while. Doing these things can actually lower your house payment.

Banks giving loans to low income families, or those with poor credit, is what got us into this mess in the first place.

If you have poor credit, or can't afford the mortgage payments, then you shouldn't be given a loan.

This is one of the master reasons that warranted the Occupy protests ongoing. Corruption between banks, Wall Street and Government.

I talk with the people in this article today and found it goes deep than what's written in there letter "they told me when they where going throw the process of buying there property they ask there bank be fore hand could the payments go up and if so by how much as they did not want something in which they could not afford. and then where told it would go up if there taxis went up but it would only be by a few dollars
they also ask the bank will our mortgage stay with you they where told on several occasion it would in fact stay with there bank for its entirety. and they ask the same question on the day of signing the paper work. they did tell me that they told the court house on the day of signing. if what they had been told was not the case they would not sign any thing as they did not want to be lied to as they had heard the horror story form other people
and they where buying a property they could afford.
They also told me if they had know what was real going on they would not have bother buying the house.
they also had perfect credit by fore hand and did not want $120,000
doller bill to pay and that is why the brought a house $70,000."

I'm sorry but it looks to me like they where and have been taken for a ride..and that is not right in anyway you look at.