re: Cancelled homeowner’s policy refund question

I'm going to assume that your mortgage company paid the old policy, then you switched to a new insurance company and the mortgage company also paid the new policy...right?

So your mortgage company paid insurance twice and now you're trying to hang onto the refund money while you're escrow account is significantly in the negative?

I don't know if they have any recourse besides adjusting your monthly payment to recoup it, but they're not just adding it to the loan balance. They will always try to recoup escrow shortfalls in 12 months or less (possibly much sooner with what you're trying to pull). So get ready for your mortgage to go up by a few hundred a month until they makeup the shortage.