The bank opens a deposit account for a loan customer who has trouble paying their property taxes and insurance on time. I call this an escrow account because the bank required it when it originated a second mortgage (we also have first) to help the customer pay delinquent property taxes. However, the loan is not set up for escrow. If the bank is requiring this account shouldn't it be tied to the loan as an escrow account and be part of the monthly payment? If it was the customer's option I would be okay with it not being part of the loan. The lender carefully crafted comments in the file to avoid using the term "required" although that is what happened, and "escrow".

Doesn't matter how the wording is in the credit memo or rather the lender required it or the borrower volunteered it. If it is set up under the lender's control then it is an escrow account. Unless the borrower has full control of the account, they can make deposits or withdrawals in any amount for any purpose they wish at anytime they wish then it would not be an escrow account.

Review 3500.17.