My escrow is short? Who's right, me or the servicer?

Is my escrow shortage calculation wrong?

You're questioning whether your mortgage servicer calculated your escrow shortage correctly. An escrow shortage happens when the account doesn't have enough money to cover upcoming property tax and insurance payments, and the servicer typically conducts an annual analysis to determine if you owe additional funds.

Your servicer analyzes your escrow account each year, comparing what you've paid in versus actual tax and insurance costs. They calculate a target balance (usually two months of payments as a cushion) and determine if your monthly escrow payment needs to increase. The shortage represents the difference between what should be in the account and what's actually there.

Check your escrow analysis statement for the actual tax and insurance amounts paid, your current monthly escrow payment, and how they calculated the shortage. Compare these figures to your property tax bills and insurance statements to verify accuracy.

You can request a detailed breakdown from your servicer if the numbers don't match your records. Many people also get a second opinion by calculating the monthly escrow payment themselves: add annual property taxes and insurance, divide by 12, then add the cushion amount. Share any discrepancies with your servicer and they can walk you through their calculation line by line.