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How banks got a windfall for decades in Cook County

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One of the little-noticed side effects of Cook County's habitually late property tax bills was this: It was a sweet deal for the banks.

This year, the county expects to send out its tax bills in mid-July, making this the first year the county has been on time in three decades.

Michael M. Cabonargi, a commissioner on the Cook County Board of Review, said there was some concern this might be a shock to banks that collect money in escrow accounts from property owners each month to pay the bills when they came due. If the banks were used to paying in October, November or December what would they do with bills that were due Sept. 1?

But guess what?

The banks said they'd set up escrow payments all along as if the tax bills came out on time every year.

So, if you paid your property taxes through an escrow account, as many property owners do, you didn't get any kind of float all those years when the bills were late. That all went to the banks, who could collect interest on the money and then pocket it.

This year, officials at a lot of school districts and other local governments are elated that they won't have to borrow money to tide themselves over until their tax revenues finally show up. That will save them a lot of money - Cabonargi puts it at $3 million a month countywide.

But don't expect the banks to throw their hats in the air and cheer.

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1 Comment

Once again banks end up with the money. Does it ever end?

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This page contains a single entry by Thomas Frisbie published on June 6, 2012 1:10 PM.

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