DEAR BENNY: My grandmother is in her home, already at the breaking point: It's a question of food or medicine. Her house payment is $400. She's usually a bit late paying the property tax. This month she signed papers to let the mortgage company set up an escrow account. The lender paid taxes and insurance to the tune of $1,800, and now they've jacked the payment up by $270 each month, which is more than $3,200 extra a year!

Can the lender really do that? They've loaned her too much against the house, and they do not want the note to go bad. How could they be so stupid as to price someone out of a home that's not worth anything near the note? What are these dead-brained morons trying to do here?

How can we get the lender to understand that she simply does not have the extra $270 to pay each month? If she pays it, her utilities go off. --Fred

DEAR FRED: I understand your frustration. Lenders have the right to escrow for taxes and insurance, unless your state law either prohibits it or puts limitations on this right. But federal law (the Real Estate Settlement Procedures Act -- commonly known as RESPA) does put a limit on the amount of money a lender can hold above and beyond the actual payment obligation. A lender cannot hold a yearly cushion of more than two months' escrow.

But I have a real problem: While I certainly do not want any homeowner to be kicked out of his/her house, from what you have written your grandmother is financially on the edge; right or wrong, she has to pay insurance and taxes, and usually it is easier to escrow on a monthly basis rather than coming up with the entire amount when the payments are due. For most people, I don't like the concept of escrow -- but in your grandmother's case, I believe it is necessary.

I recommend the following: (1) ask the lender why it appears it is violating RESPA; (2) ask whether there are senior citizen real estate tax breaks in the state (or county) where your grandmother lives; and (3) have your grandmother look into a reverse mortgage.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.