I have never netted out the escrow on a payoff. We always return it to the customer after the loan pays off. I have some questions about why I insist on this. Somewhere in my compliance memory bank, I think I was told that it wasn't allowed in WI to net that out. Does anyone else have any information on this? I appreciate any input.

It's easy to understand why borrowers want the ability to apply the escrow to the payoff so don't have to scurry to find all that money upfront to set up a new escrow.

The borrowers have to give you permission to apply their escrow balance to the payoff.
We have a cover letter we send out with our payoff request outlining the procedure.

Is the requirement to obtain written authorization from a borrower to credit their escrow balance against their principal balance when quoting a pay-off amount a federal reg or state reg?

In either event, where can I find it?

Thank you.

Duplicate question answered here.