I’ve been following Lynnae over at Being Frugal for some time now for many reasons, but mainly because we should all choose to live more efficiently even when the economy isn’t in a downturn. Her recent home purchase – with ups and downs and good times and bad – have been fascinating to me (naturally!).  But what she wrote yesterday about her escrow account was riveting.

The bank holding the prepaid taxes in escrow on behalf of the mortgage company went belly up.  The refund check from her escrow account bounced and the dominoes began to fall. Through no fault of hers, other checks weren’t paid so although she can still expect to get her refund, she’s out for about half the check fees (the bank is refunding some).

And in one moment, when a financial institution hasn’t performed ethically, and a bank is shut down, and a lender declares bankruptcy, the lives of hundreds of consumers are turned upside down. We’re left without our money, that we worked hard to earn.  We’re left with overdraft fees to pay.  Fees that are not our fault.  We’re left wondering whether we’ll need to come up with another $1500 by November, so our property taxes will be paid.

Ouch. The lesson learned here is to always try to maintain an emergency fund.  Read your escrow statements, ask questions.

Photo by Alan Cleaver via Flickr Creative Commons. Nice job on the phot, Alan!