My bank wants to send a letter to HPML customers after completion of one year of escrowing offering to opt them out of future escrowing. I know that we can cancel the escrow account if we receive a dated written request from the customer but I want to make sure that we can prompt the request with the letter.

My understanding is that you cannot encourage a customer to stop escrow..but curiously, why would you want to? Seems the worst part is the initial set up...and it's a healthy addition, IMHO, for S&S reasons.

Why would you want to encourage the termination of escrow? It's in the bank's interest to ensure that the taxes and insurance are paid. In addition, I believe there is a section of Dodd-Frank that is calling for an extension of the escrow for HPMLs to be five years. We had never done escrow before HPMLs, but now that we're doing it, I doubt that we would even entertain a request from a customer to stop unless there were overriding circumstances.

Ditto RR & Doug. Just because the rule allows the termination of the account, doesn't mean you have to terminate it. Your mortgage covenants probably allow you to require it full term. Escrow accounts are by far the best way to keep your customers up-to-date on taxes and insurance.

(iii) Cancellation. A creditor or servicer may permit a consumer to cancel the escrow account required in paragraph (b)(3)(i) of this section only in response to a consumer's dated written request to cancel the escrow account that is received no earlier than 365 days after consummation.

You would not be canceling in response to the a consumer's written request to cancel the escrow. The consumer would be responding to your solicitation and you would be acting on their response to that solicitation.

The request to cancel escrow should be initiated by the consumer, not the lender.

Thanks for all the input. You've helped me convince them!