Can I Appeal My Property Taxes If They're in Escrow? (Yes—Here's How)

Your mortgage company pays your property taxes through escrow, so you can't appeal them, right?

Wrong.

That's exactly what the taxing authorities want you to think—and what keeps millions of homeowners paying inflated property tax bills year after year.

Here's the truth: Escrow is just a payment mechanism. Your mortgage company is writing the check, but it's still your money and your tax bill. You have every legal right to challenge an overassessment, even—especially—when taxes are paid through escrow.

And here's the kicker: When you successfully appeal and reduce your property taxes, your monthly mortgage payment goes down too.

Let that sink in. You could be lowering your mortgage payment right now, but the system is designed to make you think you can't.

Why Homeowners Think They Can't Appeal (And Why That's Wrong)

The confusion is understandable—and it serves the government's interests perfectly.

When your mortgage payment includes principal, interest, taxes, and insurance (PITI), it feels like the lender controls everything. You write one check, they distribute the money. Taxes feel like just another cost baked into your mortgage, as fixed and unchangeable as your interest rate.

But here's what's actually happening:

Your mortgage servicer collects monthly escrow payments from you, holds that money in an account, and then pays your property taxes to the county when they're due. They're acting as your financial administrator—not as the property owner.

You remain the property owner. The tax bill is in your name. The county doesn't care who writes the check—they care that the property owner (you) is paying the assessed amount.

Which means you have the legal right to challenge that assessment.

The System Benefits When You Think You Can't Appeal

Think about it: If millions of homeowners believe they can't appeal because they have escrow, that's millions of potentially inflated assessments that never get challenged.

More revenue for the government. Bigger budgets. Fatter pensions. Zero effort required.

The county doesn't send you a notice saying "By the way, even though your mortgage company pays your taxes, you can still appeal if you think you're overcharged." They're perfectly happy having someone else pay inflated bills on your behalf.

What Escrow Actually Is (And Why It Doesn't Stop Appeals)

Escrow is a payment convenience, not a transfer of rights.

Here's how it works:

1. Your lender estimates annual property taxes and insurance costs
2. They divide that by 12 to calculate your monthly escrow payment
3. You pay that amount along with your mortgage principal and interest
4. The servicer holds these funds in an escrow account
5. When property taxes come due (usually once or twice per year), the servicer pays the county from your escrow account

Critical point: The servicer is paying with your money, on your behalf. They're not paying their own taxes. They're not buying your property. They're acting as your agent for payment purposes only.

You still own the property. You're still responsible for the taxes. And you still have every right to challenge them.

The mortgage company is just the middleman handling the transaction. They have zero interest in whether your assessment is accurate—they just need to make sure taxes get paid so the county doesn't put a lien on the property securing their loan.

Why You Should DEFINITELY Appeal If You Have Escrow

Here's the beautiful part about appealing when you have escrow: A lower property tax bill means a lower monthly mortgage payment.

Let's run the numbers:

Example:

• Current annual property taxes: $8,400
• Monthly escrow portion: $700
• You appeal and reduce assessment by 15%
• New annual property taxes: $7,140
• New monthly escrow portion: $595
• Monthly savings: $105
• Annual savings: $1,260

That $105 per month stays in your pocket. Every single month. For as long as you own the home (or until the county inflates your assessment again, which you can appeal again).

Over 10 years, that's $12,600 in savings. Over a 30-year mortgage? Nearly $38,000.

And here's what it costs you to try: Usually nothing if you use TaxDrop's contingency-based service. You only pay if you save money.

Your Mortgage Payment Will Automatically Adjust

When you win an appeal and your property taxes are reduced, one of two things happens:

Option 1: Next Year's Payment AdjustsYour mortgage servicer conducts an annual escrow analysis (they're required to by federal law). When they see your new, lower property tax amount, they'll recalculate your required monthly escrow payment and lower your mortgage payment going forward.

Option 2: You Get a RefundIf your current escrow account has a surplus (because you've been overpaying based on the old, inflated assessment), the servicer may send you a refund check for the excess. Then your monthly payment adjusts to the new, lower amount.

Either way, you win. Lower taxes, lower monthly payment, more money in your pocket.

How to Appeal Property Taxes When You Have Escrow (Step-by-Step)

The appeal process is exactly the same whether you pay taxes directly or through escrow. The mortgage company is not involved in the appeal—they're just the payer, not the decision-maker.

Step 1: Get Your Property Tax Assessment Notice

Even with escrow, you should receive a property tax assessment notice from the county showing:

• Your property's assessed value
• Taxable value after exemptions
• Tax amount owed
• Appeal deadline

If you don't receive this notice (some counties only send it to the property address, which might go to your mortgage servicer), you can:

• Look up your assessment online at your county assessor/appraiser website
• Call the assessor's office and request a copy
• Check your mortgage servicer's website—some post tax documents

Critical deadline: You typically have 30-45 days from the assessment notice date to file an appeal. Don't miss this window.

Step 2: Determine If You're Overassessed

Check if your assessment is inflated by:

✓ Comparing to recent sales of similar homes in your neighborhood
✓ Looking for property record errors (wrong square footage, features you don't have)
✓ Reviewing your assessment history for unusual jumps
✓ Getting a professional assessment review (TaxDrop does this free)

If your assessed value is 10%+ higher than comparable properties or recent appraisals, you have grounds for appeal.

Step 3: File Your Appeal

You file the appeal, not your mortgage company. You're the property owner, so you're the appellant.

• Complete the appeal form (available on county assessor website)
• Submit before the deadline with any required filing fee
• Provide your contact information and property details

Do NOT contact your mortgage servicer to "ask permission." They have no authority to approve or deny your appeal. They're not involved.

Step 4: Gather Evidence

Build your case with:

• Recent comparable sales (3-5 properties)
• Photos of property condition issues
• Professional appraisal (if you have one)
• Documentation of errors in property records
• Market trend data showing declining values

Step 5: Present Your Case

Attend the hearing (or have TaxDrop represent you) and present evidence showing your assessment is inflated. The county reviews your evidence and issues a decision.

Your mortgage company is never involved in this process. They don't attend the hearing, don't review evidence, don't make decisions. This is between you (the property owner) and the county (the taxing authority).

Step 6: Notify Your Mortgage Servicer of the Outcome

If you win your appeal:

Once you receive the county's decision showing a reduced assessment:

1. Send a copy of the decision to your mortgage servicer
2. Include a letter requesting they update your escrow account
3. Most servicers will automatically adjust during annual escrow analysis

The servicer will then:

• Update your estimated annual property taxes
• Recalculate your monthly escrow payment
• Lower your total monthly mortgage payment
• Possibly refund escrow surplus

Common Myths About Appealing With Escrow (Debunked)

Myth #1: "My mortgage company won't let me appeal"

Reality: Your mortgage company has zero authority over whether you can appeal. They're the payment agent, not the property owner. You don't need their permission, approval, or involvement.

Myth #2: "I need to contact my lender before appealing"

Reality: No notification or permission required. The mortgage servicer will be informed by the county when the tax bill changes. You can (and should) send them documentation of the reduction, but you don't need to ask first.

Myth #3: "The appeal savings will just go to my escrow account, not to me"

Reality: While the savings are first applied to your escrow account, this directly lowers your monthly mortgage payment. The money stays in your bank account rather than going to the lender. It's still your savings.

Myth #4: "Appealing might violate my mortgage agreement"

Reality: Your mortgage agreement requires you to pay property taxes. It doesn't require you to pay inflated, incorrect, or excessive taxes. Appealing is your legal right and doesn't violate any mortgage terms.

Myth #5: "The savings aren't worth it if I have escrow"

Reality: The savings are actually MORE valuable with escrow because they reduce your monthly mortgage payment automatically. Lower monthly expenses improve your cash flow every single month.

Myth #6: "My mortgage company will appeal on my behalf"

Reality: Mortgage servicers almost never appeal assessments on behalf of borrowers. They have no financial incentive—they're just passing your money to the county. The tax burden falls on you, not them, so they don't care if it's inflated.

What Happens to Your Mortgage Payment When You Win an Appeal

Let's walk through the actual mechanics of how your mortgage payment changes after a successful appeal.

Immediate Impact

During Appeal Year:The county processes your appeal and issues a revised assessment. They recalculate your tax bill for the current year based on the lower assessment.

What happens to money already paid:If your mortgage servicer already paid your property taxes at the inflated amount, the county will issue a refund for the overpayment. This refund goes to whoever paid the taxes—in this case, your mortgage servicer.

The servicer deposits this refund into your escrow account.

Escrow Analysis & Adjustment

Annual Escrow Analysis (Required by Law):Federal regulations require mortgage servicers to conduct an annual escrow analysis. During this analysis, they:

1. Review actual tax and insurance costs from the past year
2. Compare actual costs to estimated costs
3. Project costs for the coming year
4. Determine if escrow payments need to adjust

When they discover your taxes decreased:

• They recalculate required monthly escrow payment based on new, lower tax amount
• They determine if your escrow account has a surplus
• They adjust your monthly mortgage payment downward
• They may refund excess escrow funds

Three Possible Outcomes

Outcome 1: Lower Payment + Refund CheckIf your escrow account has a surplus exceeding $50 (federal threshold), the servicer will:

• Send you a refund check for the excess
• Lower your monthly mortgage payment going forward

Outcome 2: Lower Payment OnlyIf the surplus is less than $50, it stays in your escrow account as a cushion, but your monthly payment still decreases based on the new tax amount.

Outcome 3: Immediate AdjustmentSome servicers allow you to request an immediate escrow analysis if you provide documentation of a tax reduction. You don't have to wait for the annual analysis—you can get your payment lowered right away.

Real Numbers Example

Before Appeal:

• Monthly Principal & Interest: $1,500
• Monthly Escrow (taxes + insurance): $850
• Total Monthly Payment: $2,350

After Successful 15% Tax Reduction:

• Monthly Principal & Interest: $1,500 (unchanged)
• Monthly Escrow (taxes + insurance): $745 ($105 less)
• Total Monthly Payment: $2,245

Refund from overpayment: $630 (half-year of overpaid taxes)

Annual savings: $1,260
10-year savings: $12,600
30-year savings: $37,800

And that's assuming property values and taxes stay flat—which they won't. Every future tax increase will be applied to your new, lower assessment base, compounding your savings.

Do You Need to Tell Your Mortgage Company You're Appealing?

Short answer: No, but it's smart to notify them after you win.

During the appeal process: You don't need to tell your mortgage servicer you're filing an appeal. They're not involved in the process and have no role in the outcome.

After you win: Once you receive documentation showing your assessment was reduced and your new tax amount, send a copy to your mortgage servicer along with a letter requesting they update your escrow analysis.

Include:

• Copy of county's appeal decision
• New assessment notice showing reduced value
• New tax bill showing reduced amount
• Request for immediate escrow account adjustment

‍

Sample letter:

[Your Name]
[Property Address]
[Date]

[Mortgage Servicer Name]
[Address]

RE: Escrow Account Adjustment Request – Loan #[Your Loan Number]

Dear [Servicer]:

I am writing to notify you of a reduction in my property tax assessment for the property located at [Address].

I successfully appealed my property tax assessment, and the county has reduced my assessed value from $[Old Value] to $[New Value]. This results in an annual property tax reduction from $[Old Amount] to $[New Amount], a savings of $[Difference] per year.

Enclosed are copies of:
- County appeal decision
- New property tax assessment notice
- Revised tax bill

Please update my escrow account to reflect this reduced property tax amount and adjust my monthly mortgage payment accordingly. If my escrow account has a surplus due to overpayment of property taxes, please process a refund per federal escrow regulations.

Please confirm receipt of this request and provide an updated escrow analysis showing my new monthly payment amount.

Thank you,
[Your Signature]
[Your Name]


What If Your Mortgage Servicer Doesn't Adjust Your Payment?

Sometimes servicers drag their feet on escrow adjustments. They're required by law to conduct annual analyses, but they might not do an immediate adjustment when you request one.

If your servicer won't adjust your payment:

1. Reference Federal LawThe Real Estate Settlement Procedures Act (RESPA) requires servicers to:

• Conduct annual escrow analyses
• Refund surpluses exceeding $50
• Provide written explanation of escrow calculations

2. Submit a Written RequestPut your adjustment request in writing (use the sample letter above) and send via certified mail with return receipt. This creates a paper trail.

3. File a ComplaintIf the servicer refuses to adjust or doesn't respond within 30 days:

• File a complaint with the Consumer Financial Protection Bureau (CFPB): consumerfinance.gov/complaint
• File a complaint with your state's banking regulator
• Contact a consumer protection attorney if large sums are involved

4. Wait for Annual Escrow AnalysisIf all else fails, the servicer must adjust your payment during the annual escrow analysis. They can't ignore reduced property taxes indefinitely—federal law requires accurate escrow calculations.

Special Situations: Refinancing, Selling, or Paying Off Mortgage

If You're Refinancing

Appeal before refinancing if possible. A lower property tax amount means:

• Lower monthly payment on your new loan
• Better debt-to-income ratio (might qualify for better rates)
• Lower escrow reserves required at closing

If you're mid-appeal when refinancing, notify your new lender so they use the correct (lower) tax amount for escrow calculations.

If You're Selling

You can still appeal even if you plan to sell. If you win:

• Your current escrow overpayment gets refunded at closing
• The new buyer benefits from lower taxes going forward (which can be a selling point)
• You might negotiate a higher sale price since property taxes are lower

If You Pay Off Your Mortgage

Once your mortgage is paid off, you'll pay property taxes directly to the county instead of through escrow. Appealing becomes even more important because you'll see the full benefit of reduced taxes immediately—no waiting for escrow analysis or servicer adjustments.

TaxDrop Makes It Easy to Appeal With Escrow

The process is simple:

1. TaxDrop analyzes your assessment (free, no obligation)
2. If overassessed, TaxDrop files and fights your appeal
3. You provide documents to TaxDrop (not to your mortgage company)
4. TaxDrop wins your reduction (average 10-15% savings)
5. TaxDrop handles county paperwork
6. You send the decision to your mortgage servicer
7. Your monthly mortgage payment drops automatically

Cost: $0 upfront. TaxDrop only gets paid 25% of your first year's tax savings if they win. If they don't reduce your taxes, you owe nothing.

What this means with escrow:

• Annual tax savings: $1,200
• TaxDrop fee (25% of year 1): $300 one-time
• Your net savings year 1: $900
• Your savings year 2-30: $1,200/year (no more fees)
• Your monthly mortgage payment: $100 lower every month

All while your mortgage company remains completely uninvolved in the process.