Government regulations also allow escrow companies to maintain an extra amount in your account as a cushion in case unexpected payments arise. So, depending on your escrow balance, your monthly payment may be slightly more than the total expenses divided by When your lender performs their escrow analysis, they will send you a statement, either by mail or in your online account.
This statement will detail the results of the escrow analysis and your new monthly payment amount. Your escrow balance is the amount of money that is held for you in your escrow account also called an impound account in some areas of the country.
You pay into your escrow account each month as part of your regular mortgage payment. Not all lenders require an escrow account, though many do.
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Appendix E to this part illustrates these steps. At the completion of the escrow account computation year or any short year, the new servicer shall perform an escrow analysis and provide the borrower with an annual escrow account statement.
For each escrow account, the servicer shall conduct an escrow account analysis to determine whether a surplus, shortage or deficiency exists. If a servicer advances funds in paying a disbursement, which is not the result of a borrower's payment default under the underlying mortgage document, then the servicer shall conduct an escrow account analysis to determine the extent of the deficiency before seeking repayment of the funds from the borrower under this paragraph f.
A borrower is current if the servicer receives the borrower's payments within 30 days of the payment due date. If the servicer does not receive the borrower's payment within 30 days of the payment due date, then the servicer may retain the surplus in the escrow account pursuant to the terms of the federally related mortgage loan documents. Such an agreement shall cover only one escrow accounting year, but a new voluntary agreement may be entered into after the next escrow analysis is performed.
The voluntary agreement may not alter how surpluses are to be treated when the next escrow analysis is performed at the end of the escrow accounting year covered by the voluntary agreement. A The servicer may allow a shortage to exist and do nothing to change it;. B The servicer may require the borrower to repay the shortage amount within 30 days; or. C The servicer may require the borrower to repay the shortage amount in equal monthly payments over at least a month period.
A The servicer may allow a shortage to exist and do nothing to change it; or. B The servicer may require the borrower to repay the shortage in equal monthly payments over at least a month period. If the escrow account analysis confirms a deficiency, then the servicer may require the borrower to pay additional monthly deposits to the account to eliminate the deficiency. A May allow the deficiency to exist and do nothing to change it;. B May require the borrower to repay the deficiency within 30 days; or.
C May require the borrower to repay the deficiency in 2 or more equal monthly payments. If the servicer does not receive the borrower's payment within 30 days of the payment due date, then the servicer may recover the deficiency pursuant to the terms of the federally related mortgage loan documents. The servicer shall notify the borrower at least once during the escrow account computation year if there is a shortage or deficiency in the escrow account.
The notice may be part of the annual escrow account statement or it may be a separate document. After conducting the escrow account analysis for each escrow account, the servicer shall submit an initial escrow account statement to the borrower at settlement or within 45 calendar days of settlement for escrow accounts that are established as a condition of the loan. The initial escrow account statement shall indicate the amount that the servicer selects as a cushion.
The statement shall include a trial running balance for the account. If the servicer does not incorporate the initial escrow account statement into the HUD-1 or HUD-1A settlement statement, then the servicer shall submit the initial escrow account statement to the borrower as a separate document. For escrow accounts established after settlement and which are not a condition of the loan , a servicer shall submit an initial escrow account statement to a borrower within 45 calendar days of the date of establishment of the escrow account.
The servicer may include the initial escrow account statement in the basic text or may attach the initial escrow account statement as an additional page to the HUD-1 or HUD-1A settlement statement. The initial escrow account statement need not identify a specific payee by name if it provides sufficient information to identify the use of the funds.
For example, appropriate entries include: county taxes, hazard insurance, condominium dues, etc. If a particular payee, such as a taxing body, receives more than one payment during the escrow account computation year, the statement shall indicate each payment and disbursement date.
If there are several taxing authorities or insurers, the statement shall identify each taxing body or insurer e. For each escrow account, a servicer shall submit an annual escrow account statement to the borrower within 30 days of the completion of the escrow account computation year. The servicer shall also submit to the borrower the previous year's projection or initial escrow account statement.
The servicer shall conduct an escrow account analysis before submitting an annual escrow account statement to the borrower. The annual escrow account statement shall provide an account history, reflecting the activity in the escrow account during the escrow account computation year, and a projection of the activity in the account for the next year.
In preparing the statement, the servicer may assume scheduled payments and disbursements will be made for the final 2 months of the escrow account computation year.
The annual escrow account statement must include, at a minimum, the following the items in paragraphs i 1 i through i 1 iv must be clearly itemized :. This exemption also applies in situations where the servicer has brought an action for foreclosure under the underlying federally related mortgage loan, or where the borrower is in bankruptcy proceedings. If the servicer does not issue an annual statement pursuant to this exemption and the loan subsequently is reinstated or otherwise becomes current, the servicer shall provide a history of the account since the last annual statement which may be longer than 1 year within 90 days of the date the account became current.
The servicer may deliver the annual escrow account statement to the borrower with other statements or materials, including the Substitute , which is provided for Federal income tax purposes.
By using a short year statement a servicer may adjust its production schedule or alter the escrow account computation year for the escrow account. The servicer shall deliver the short year statement to the borrower within 60 days from the end of the short year.
Upon the transfer of servicing, the transferor old servicer shall submit a short year statement to the borrower within 60 days of the effective date of transfer. If a borrower pays off a federally related mortgage loan during the escrow account computation year, the servicer shall submit a short year statement to the borrower within 60 days after receiving the payoff funds. See interpretation of 17 k Timely payments. Upon advancing funds to pay a disbursement, the servicer may seek repayment from the borrower for the deficiency pursuant to paragraph f of this section.
If the taxing jurisdiction neither offers a discount for disbursements on a lump sum annual basis nor imposes any additional charge or fee for installment disbursements, the servicer must make disbursements on an installment basis. If, however, the taxing jurisdiction offers a discount for disbursements on a lump sum annual basis or imposes any additional charge or fee for installment disbursements, the servicer may, at the servicer's discretion but is not required by RESPA to , make lump sum annual disbursements in order to take advantage of the discount for the borrower or avoid the additional charge or fee for installments, as long as such method of disbursement complies with paragraphs k 1 and k 2 of this section.
The Bureau encourages, but does not require, the servicer to follow the preference of the borrower, if such preference is known to the servicer.
The borrower must voluntarily agree; neither loan approval nor any term of the loan may be conditioned on the borrower's agreeing to a different disbursement basis or disbursement date.
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