Mortgage Servicer Didn’t Pay Your Property Taxes? What to Do

If your property taxes are paid through escrow and the county says a bill is unpaid, the mortgage servicer is usually responsible for fixing it. Federal rules require the servicer to pay escrowed taxes on time, before any penalty, as long as you are no more than 30 days behind on your mortgage. That applies even if your escrow account is short of money. When it misses a payment, you can send a written notice of error. The servicer must then acknowledge it within 5 business days and resolve it within 30 business days. This guide gives you the exact rules, a sample letter you can copy, and steps for penalties, complaints, and tax-sale notices.

The short answer

• Confirm what is unpaid first. Check the parcel, tax year, installment, and balance on the county’s own site before you contact anyone.
• The servicer must pay on time. Under 12 CFR 1024.17(k) (opens in a new tab) it must pay by the penalty deadline and advance its own money if escrow is short, as long as your payment is not more than 30 days overdue.
• Send a written notice of error. Under 12 CFR 1024.35 (opens in a new tab) the servicer must acknowledge it within 5 business days and fix it or explain within 30 business days. It can extend that by 15 business days once.
• Ask the servicer to cover penalties it caused. Put the request in the notice of error, and check that the charge is not later billed to your escrow.
• Watch the county deadline yourself. A dispute does not stop the county’s penalty clock or a tax sale.
• Escalate if needed. You can file a complaint with the CFPB. Get legal or housing-counselor help at once if a tax sale or foreclosure notice arrives.

What federal rules require of your servicer

These rules come from the Real Estate Settlement Procedures Act (RESPA) and its Regulation X. They cover most closed-end mortgages on one- to four-unit homes. Home equity lines of credit are excluded from the error-resolution rules (§1024.31 (opens in a new tab)). Small servicers are exempt from some servicing rules, but not from the error-resolution process or the escrow-payment duty.

The law behind these rules is 12 U.S.C. § 2605 (opens in a new tab). Subsection (g) requires escrowed taxes to be paid “in a timely manner as such payments become due.” Subsection (f) lets a borrower sue for actual damages, plus up to $2,000 in additional damages for a pattern or practice of noncompliance, along with costs and attorney’s fees. Under 12 U.S.C. § 2614 (opens in a new tab), such a suit must be filed within three years of the violation.

The 30-day condition is important. If your mortgage payment is more than 30 days late, the timely-payment duty under RESPA no longer applies in the same way, and your loan documents control. Keep your mortgage payments current while you dispute the tax problem. A notice of error does not pause what you owe on the loan.

Step 1: Confirm exactly what is unpaid

Open your county treasurer’s or tax collector’s account page through our county search. Write down the parcel number, tax year, bill number, installment, amount due, and the date penalties start. Save a screenshot or PDF.

Make sure the unpaid item is a bill your servicer was supposed to pay. These are common mix-ups:

• A supplemental or corrected bill went to you, not the servicer. California supplemental bills are mailed to the owner, for example. See our supplemental bill guide.
• A prior-year balance from before you bought the home, or before escrow began.
• A special assessment or utility charge billed separately from the main tax bill. See our special assessments guide.
• The servicer paid, but the payment went to the wrong parcel or is sitting unapplied at the collector’s office.

Ask the collector whether any payment is pending, unapplied, or was returned, and what it needs to trace one.

Step 2: Call the servicer and get the payment details

Call the escrow department and ask for the disbursement record for that bill: the amount, date, payee, parcel number, and check or transfer number. Note the date, time, and name of the person you spoke with. A phone call is not a notice of error, so follow up in writing the same day.

If the servicer shows a payment that the county does not, put the two records side by side. A $2,400 debit in escrow and an unpaid $2,400 installment at the county do not prove where the money went. The payee, parcel, and reference number will show whether they are the same transaction.

Step 3: Send a written notice of error

A notice of error must be in writing. It must include your name, information that identifies your loan, and the error you believe happened (§1024.35(a) (opens in a new tab)). Check your mortgage statement or the servicer’s website for a designated “notice of error” or “qualified written request” address. If the servicer has set one, you must use it, and it is often different from the payment address. The servicer does not have to treat a note written on a payment coupon as a notice of error.

Send it by a trackable method and keep the receipt. Attach copies, never originals.

Sample notice of error letter

Copy this, fill in the brackets, and delete anything that does not apply.

If you also need documents, such as the escrow payment history or check images, you can send a separate request for information under §1024.36 (opens in a new tab) to the same address.

Step 4: Protect yourself from the county deadline

The servicer’s 30-business-day response clock and the county’s penalty date are unrelated. If the penalty date or a delinquency step is close, tell both offices the date in writing and ask the servicer to pay right away.

Should you pay the tax bill yourself? How to avoid a double payment

Sometimes paying the bill yourself is the only way to stop a penalty or a sale. But if the servicer’s payment is already on its way, you could end up paying twice. Before you pay an escrowed bill:

1. Ask the servicer directly whether it has sent, or has scheduled, a payment for that bill number and tax year. Get the answer in writing if you can.
2. Ask the collector whether any payment is pending or unapplied, and how it handles duplicate payments and refunds. Refund rules and timing vary by county.
3. If you pay, pay only the exact unpaid item. Save the receipt showing the parcel, tax year, and amount.
4. Tell the servicer right away, in writing, that you paid. Ask it to stop any disbursement for that item and to reimburse you from escrow. If it disburses anyway, ask the county for a refund of the duplicate and send the servicer the refund record so the escrow account is credited.

Receiving a copy of the tax bill does not mean the servicer will not pay it. In Texas, for example, the Comptroller notes that sending the bill to a mortgage company that pays from escrow satisfies the county’s mailing requirement (Property Tax Bills, 98-1086 (opens in a new tab)). Many owners get a courtesy copy anyway. Supplemental and corrected bills are the exception to watch, because they often sit outside the servicer’s routine. Never assume coverage. Get a direct answer tied to that bill.

Step 5: Get penalties and fees reimbursed

A servicer that misses the penalty deadline should bear the cost of that mistake. In practice, you get it reimbursed by asking clearly and then checking the accounting.

• Ask in the notice of error that the servicer pay any county penalty, interest, or collection fee from its own funds. The sample letter does this.
• Check your next escrow analysis. If the penalty appears as an escrow disbursement, the servicer has charged you for its error. That can also create a shortage. See our escrow shortage guide to read the statement.
• Check your loan for late fees or other charges. A fee with no reasonable basis is itself a covered error (§1024.35(b)(5) (opens in a new tab)).
• Ask the county about waivers, but act fast. Some states let a collector waive penalties in narrow cases, with strict deadlines. In Texas, a waiver request generally must be in writing before the 181st day after the delinquency date (Texas Comptroller (opens in a new tab)).
• Keep a record of other losses. These might include a lost early-payment discount or the cost of certified mail. RESPA allows you to recover actual damages in court.

Step 6: File a complaint with the CFPB

If the servicer misses its deadlines, finds “no error” despite the county’s records, or refuses to cover the penalty, submit a complaint to the Consumer Financial Protection Bureau (opens in a new tab). The CFPB sends it to the company and says companies generally respond within 15 days. Some say the response is in progress and send a final response within 60 days. Keep it short and factual. List the dates, amounts, and parcel number, and attach the county record, your notice of error, and any reply. Uploads are limited to 50 pages.

You can also complain to your state’s mortgage or banking regulator. If the loan is backed by FHA, VA, Fannie Mae, or Freddie Mac, those agencies have servicer rules of their own. Ask the servicer who owns or insures your loan.

If a delinquency, lien, or tax-sale notice arrives

Treat any notice that mentions a lien, certificate sale, tax deed, or foreclosure as urgent. A pending complaint or notice of error does not pause county enforcement.

1. Call the collector the same day. Ask for the exact payoff amount, the date it is good through, and the sale or next-action date.
2. Get the servicer to pay in writing, or pay it yourself. If time is short, paying the payoff yourself may be the safest move. Then demand reimbursement through a notice of error.
3. Get proof the sale is cancelled, or that your parcel was removed from the sale list.
4. Get help. Contact a real estate attorney or a HUD-approved housing counselor (opens in a new tab). The CFPB also lists the HOPE Hotline at (888) 995-4673.

If taxes were already sold as a lien or certificate, redemption rules and costs depend on your state. Our guide to delinquent property taxes, liens, and tax sales explains the stages.

Close the file properly

You are done only when all of these are true:

• The county shows the bill paid in full, with no penalty balance, on the right parcel and tax year.
• The servicer’s escrow history shows one disbursement for that bill, not two.
• No penalty or fee from the error appears in escrow or on your loan.
• You have the servicer’s written response to your notice of error.

Then set a reminder to check the county site after each future due date. It takes two minutes and catches the next problem before penalties start.

Frequently asked questions

Who pays the penalty if my mortgage company paid my property taxes late?

The servicer should, if it was responsible for the late payment and you were not more than 30 days behind. Ask for this in a written notice of error. Then check that the penalty is not charged to your escrow account later.

How long does a servicer have to respond to a notice of error?

It must acknowledge it within 5 business days. It must correct the error, or explain in writing why it found none, within 30 business days. It can extend that once by 15 business days if it tells you in writing before the 30 days run out.

Does my servicer have to pay my taxes if my escrow account is short?

Yes, if your mortgage payment is not more than 30 days overdue. The servicer must advance its own funds to pay on time. It can then collect the shortfall from you as an escrow deficiency.

Can I lose my house if my mortgage company doesn’t pay the property taxes?

Unpaid taxes can lead to a lien and, eventually, a tax sale, no matter whose mistake it was. That is why you should watch the county deadline yourself and act at once on any delinquency notice. The servicer’s liability does not stop the county’s process.

Should I pay my property taxes myself if they’re in escrow?

Only after confirming with both the servicer and the county that no payment is pending, or when a deadline is about to pass. If you pay, tell the servicer in writing right away so it does not pay the same bill.

Can I sue my mortgage servicer for not paying property taxes?

RESPA lets borrowers sue for actual damages, plus up to $2,000 more if there is a pattern or practice of violations, along with costs and attorney’s fees. Suits must be filed within three years. Talk to a consumer or real estate attorney about whether a claim makes sense.