The CFPB recently released new FAQs regarding the Mortgage Servicing Rule and Regulation X and Regulation Z relating to escrow account guidance and analysis.
Putting it Into Practice: Some key takeaways include the following:
- The initial escrow statement is the first disclosure statement that the servicer delivers to the borrower concerning the borrower’s escrow account. It must include: (i) the amount of the monthly mortgage payment; (ii) the portion of the monthly payment going into the escrow account; (iii) itemized anticipated disbursements to be paid from the escrow account; (iv) anticipated disbursement dates; (v) the amount the servicer elects as a cushion; and (vi) trial running balance for the account.
- Servicers must send the borrower the annual escrow account statement within 30 days of the completion of the escrow account computation year and conduct an escrow account analysis before sending the annual escrow account statement to the borrower.
- The annual escrow statement must include, among other things, an account history that reflects the activity in the escrow account during the prior escrow account computation year and a projection of the activity in the account for the next escrow account computation year.
- If there is a deficiency that is equal to or more than one month’s escrow account payment, the servicer may accept an unsolicited lump sum payment to resolve the deficiency. However, the servicer cannot require or provide the option of a lump sum payment on the annual escrow account statement. The annual escrow statement may only reflect that the servicer is allowing a deficiency to exist or that the servicer is requiring the borrower to repay the deficiency in two or more equal monthly payments.