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Why Is TD Bank Overcharging In Property Taxes & Then Not Telling You Until Yrs Later

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Newbie
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Nov 20, 2007
77 posts
6 upvotes

Why Is TD Bank Overcharging In Property Taxes & Then Not Telling You Until Yrs Later

Should the bank that holds your mortgage be telling you that you overpaid in property taxes because they were charging the wrong amount in your monthly mortgage payment. When I renewed back in 2010, this surplus added up to $5000, which I was totally unaware of. If I knew, I would have invested it or something.

But as I mentioned in my other post, what really p*sses me off me is that TD knew I was unemployed in 2009 and I was using a line of credit to pay for food and utilities. That $5000 could have saved me a fortune in interest TD was charging me.

Two weeks ago, I was making arrangements to close my business account with the bank and I was informed that the past 2 years, I've accumuliated another $1500 because TD was still overcharging me in property taxes and never bothered to correct it.


So is this normal for the bank not to tell you about these overpayments and why they're constantly making these payment calculation errors in the first place?
50 replies
Deal Addict
Jan 19, 2011
3208 posts
1526 upvotes
It doesn't surprise me at all, although the amount seems quite high. Wouldn't you have become aware, or was the tax bill sent to the bank only, and not to both the bank and you as property owner.

I have a simple solution, arrange your mortgage so that you are responsible for paying your tax account, rather than the bank. I have done this for the last twelve years. The bank collects a mortgage or LOC payment only, and I pay the property tax personally quarterly (or whenever the heck I feel like!).
"The truth is incontrovertible, malice may attack it, ignorance may deride it, but in the end; there it is."
Just a guy who dabbles in lots of stuff learning along the way. I do have opinions, and readily share them!
Newbie
Feb 26, 2011
93 posts
12 upvotes
anyone that lets the bank collect their property taxes is a fool. They usually charge a fee to do it plus you get no interest.
Deal Guru
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Nov 18, 2005
11955 posts
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Kingston
Initially they overcharge in order to make sure they have collected the full year's amount when the payments are made to your municipality. For example if your municipality collects its property taxes in a few payments over the first 9 months, then your mortgagor will want to collect the entire amount over nine months. They should adjust it down after that, but initially they will collect more than 1/12 of the annual amount.
Member
Oct 26, 2005
405 posts
109 upvotes
Toronto
Sweet Juicy Bacon wrote: So is this normal for the bank not to tell you about these overpayments and why they're constantly making these payment calculation errors in the first place?
TD Canada ?
aknny
Deal Fanatic
Mar 24, 2008
6278 posts
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Toronto
Yes, it is. In my opinion, paying your property tax through bank is stupidity. Pay it yourself and this won't ever happen.
Deal Addict
Jan 19, 2011
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It does seem not the smartest thing to do, however I have a feeling that many banks either push the 'property tax on mortgagees behalf' or even make it a requirement of obtaining a mortgage. This for the simple fact that the first entity in line to collect off the forced sale of a property is the local municipal government. The bank does not want to end up ever seeing properties that it holds mortgages agains put up for tax sale because the property owner has been unable to pay the property tax for a period of time (3 years I believe?)

It is in the banks interest to ensure property taxes are paid, and collecting and remitting them is one way to do this.

I paid the bank in this fashion on my first mortgage, for the first five years, then after changing banks for that, and purchasing other properties, it was just assumed by the banks I dealt with that we would pay our property tax, not them.
"The truth is incontrovertible, malice may attack it, ignorance may deride it, but in the end; there it is."
Just a guy who dabbles in lots of stuff learning along the way. I do have opinions, and readily share them!
Deal Guru
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Nov 18, 2005
11955 posts
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Kingston
fieldhousehandyman wrote: I have a feeling that many banks either push the 'property tax on mortgagees behalf' or even make it a requirement of obtaining a mortgage. This for the simple fact that the first entity in line to collect off the forced sale of a property is the local municipal government. The bank does not want to end up ever seeing properties that it holds mortgages agains put up for tax sale because the property owner has been unable to pay the property tax for a period of time (3 years I believe?)

I used to work for a lender and this is definitely correct.
Deal Fanatic
Mar 24, 2008
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Toronto
JWL wrote: I used to work for a lender and this is definitely correct.

True, but they can't force you into this arrangement.
Deal Addict
Feb 4, 2008
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ksgill wrote: True, but they can't force you into this arrangement.
Yes and no. They can make it a condition of your mortgage. You on the other hand are free to use any lender you choose.
Do your mortgage math correctly!
Deal Addict
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Nov 30, 2005
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Ottawa, ON
TD tried to put the condition on my mortgage that I need to pay the property tax through them citing CMHC rules which I disputed. Called CHMC and confirm nothing like that existed. I informed them that I would not accept the offer with such a condition and they called me back asking if I would take the mortgage if they removed it (knowing that I already had an offer from CIBC). Do not have the banks pay your taxes because its just extra interest on your mortgage.
Deal Fanatic
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Nov 19, 2004
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Cambridge, ON
On the other side which is also annoying, if they do not take enough off each mortgage payment to cover the property taxes, you end up paying interest of the shortfall. After my first couple of years of doing this, I quickly realized that I needed to call the bank and tell them I would take care of my own property taxes.

To the OP, do you not get periodic statements which would indicate that there was an overpayment in property taxes? You should at least get an annual statement regarding your mortgage and the balance of the property taxes paid on your behalf.
Deal Addict
Jan 19, 2011
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Statements in theory would be helpful, but have you ever tried to make real sense of a property tax bill? Probably the most confusing and complicated statement of account I have ever come across!
"The truth is incontrovertible, malice may attack it, ignorance may deride it, but in the end; there it is."
Just a guy who dabbles in lots of stuff learning along the way. I do have opinions, and readily share them!
Deal Expert
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Aug 22, 2003
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Niagara Falls
Fieldhouse, I think Don was referring to a mortgage statement. We get one via snail mail at the end of each calender year as well as can check it online via web banking at any time.

Ours summarizes the property taxes paid on our behalf as well as the current balance of the tax account and the interest it generated. Contrary to other posts here, our tax account does generate interest (as little as it is) and there is no fee to have the bank pay the taxes on our behalf.

Frankly, we had friends almost loose their house due to unpaid taxes. They "thought" they would pay them on their own but something always came up. Once they got behind, it was a snowball effect. By the time the city started proceedings to take their house, they had a very difficult time and ultimately ended up refinancing with a B or C lender (A's wouldn't touch them at that point) as a much higher interest rate and only on the condition that taxes were paid by them.
Thinking seriously about the 4 S's...Sun, Sand, Surf and ... Booked for Sept in Mexico and booked Samana DR for Jan!
Deal Fanatic
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Nov 19, 2004
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Cambridge, ON
I know when I had the bank paying our property tax, they sent the statement basically saying how much they collected, how much the property taxes were and what the difference was. And if the difference was negative (as it was in my case), how much went to interest.

I don't think any statements are ever very clear, but there should be some clue that excess was being collected.
Deal Fanatic
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Nov 19, 2004
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Cambridge, ON
CSK'sMom wrote: Fieldhouse, I think Don was referring to a mortgage statement. We get one via snail mail at the end of each calender year as well as can check it online via web banking at any time.
Ah yes, I was referring to the mortgage statement. Property tax statements are another story. Though ours has very little to understand on it, value of property times x % = how much goes to the city, x y% = how much goes to the region, x z% = how much goes to education. Total it up and that is our bill. They don't provide much more detail than that on our bills.
Newbie
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Nov 20, 2007
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esoxlee wrote: TD Canada ?
Yes, TD.
ZxExN wrote: TD tried to put the condition on my mortgage that I need to pay the property tax through them citing CMHC rules .
TD made the same claim to me.
JWL wrote: Initially they overcharge in order to make sure they have collected the full year's amount when the payments are made to your municipality. For example if your municipality collects its property taxes in a few payments over the first 9 months, then your mortgagor will want to collect the entire amount over nine months. They should adjust it down after that, but initially they will collect more than 1/12 of the annual amount.

Looks like TD Never adjusted over the 5 years and just kept on over-collecting. Even after I renewed in 2010, they kept on overcharging and never adjusted. Is this just incompetence or are they deliberately doing this and earning interest for themselves with my money. What really enrages me is that TD knew I was unemployed in 2009 and they were also aware I was slowly eating into my line of credit to pay for food and utilities. That $5000 could have prevented me from maxing out my line of credit after my EI and savings ran out. They said nothing.
Member
Oct 26, 2005
405 posts
109 upvotes
Toronto
fieldhousehandyman wrote: It doesn't surprise me at all, although the amount seems quite high.
I would not be surprised if his renewal in 2010 was his second or even third renewal. So that $5000 surplus includes overcharges from more than one term (5+ yrs).
aknny
Deal Addict
Dec 31, 2009
1568 posts
154 upvotes
I was given the option of having TD pay my property taxes, and I took them up on it. It's just one less thing for me to worry about.

There is no fee, whoever said there was a fee earlier in the thread is incorrect. They also pay me interest on the account. My rep said it works just like a bank account: money goes into the account every month, interest is calculated daily on the daily closing balance, interest earned is deposited on the 1st of every month, four times a year they pay my taxes on the due date from the account, and that's that. In January I get a statement from them showing what went in, and what went out.

They like to keep a 3 month buffer in there, which is fair enough in my opinion. It's a convenience, so it's worth something.

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