Changing Loan Payment Based on Escrow Changes
by Mary Beth Guard
Question: How often can loan payments be changed based on escrow changes on a RESPA-covered loan?
Answer: HUD's Regulation X (the RESPA reg) appears to contemplate two situations where a payment would change based on escrow factors:
at the time of the annual escrow account analysis;
at other times during the year if the servicer of the loan has advanced funds in paying a disbursement, which is not the result of a borrower's payment default under the mortgage, 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.
If an escrow account analysis is performed more frequently than annually, and it reveals a surplus, a change could also be made at that time.
Other than in an instance where disbursements have to be advanced by the servicer (rather than simply paid out of escrowed funds), however, it would appear that the amount of the loan payment should just be changed once a year.
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