I did some research and found a few posts regarding "required escrow accounts" from the lenders perspective. However, does anyone know of any guidance concerning a customer that wants to escrow and a lender that chooses not to (lender says customer can't make regular P+I on time, let alone additional escrow payment)?

As I for as I know you are not required to escrow (other than for flood if you escrow for other items), however if they can't make their P&I payment on time that would indicate they probably won't pay their taxes and insurance on time. If they are not paying the P&I payment on time what's the difference is making a collection call for the additional escrow payment. In this situation I would think you might want to collect as much of the Taxes and Insurance as you can.

If they cannot make their P&I on time I would not mess with it. Like Dan said, the only time you are required to escrow is if you are currently escrowing and flood ins is required.

From exerience, if you have an account that chronically pays late it becomes a tracking nightmare. Not only that, the regulation states that on accounts that become delinquent that the rules for escrow do not apply.

If your lender really believes this is a bad account, I wouldn't go there.

I'm with Dan on this one. I would definitely require escrow for taxes and insurance, to make sure that they are paid. In fact, I have imposed this in the past.

Interestingly enough, once we included everything in the monthly payment, and the customer knew their payment would be the same each month, and that we would take care of getting the bills and paying them, they straightened out their act. Hey, tough love works.