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#1802397 - 04/08/13 04:55 PM
Escrow & Deficiency already
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Diamond Poster
Joined: Aug 2003
Posts: 1,264
Southeast
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We are new to the whole escrow process so any help is much appreciated.
We have a loan that closed back in November and we established an escrow account on the loan and made an initial payment to the insurance company. Now there seems to be some insurance underwriting issues where the insurance company said the client didn't do some things that were required and the client had so many days to get them done or the insurance policy would cancel. Throug discussions with the client and the insurance company, the items were finally cleared up and a new insurance policy had to be issued. In the meantime, the refund from the previous policy was placed on the premium of the new policy and there is still a remaining balance of about $400 left to pay. This loan does not analyize for another 8 months or so. So, my question is what should we do? Should we force an anlysis, and then spread any increase over payments or how would others treat this situation? Obviously, we have to go ahead and make the payment but just doesn't seem right that the borrower gets to use the banks money for a period of time without repayment.
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#1802405 - 04/08/13 05:04 PM
Re: Escrow & Deficiency already
Shopgirl
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10K Club
Joined: Jul 2003
Posts: 17,410
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but just doesn't seem right that the borrower gets to use the banks money for a period of time without repayment. Maybe not but this is the crux of doing escrows. Make the payment and then do the analysis. You have to offer the borrower the option of making up the difference or spreading out the payments. You should check the Reg and decide if you're going to offer them the minimum number of months to repay or spread it longer.
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#1802411 - 04/08/13 05:17 PM
Re: Escrow & Deficiency already
Shopgirl
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Diamond Poster
Joined: Aug 2003
Posts: 1,264
Southeast
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Thanks Truffle......okay we make the payment....do we force an early analysis now and then readjust the computation year or do we just wait for the annual analysis to happen come November and settle up the difference then?
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#1802484 - 04/08/13 07:06 PM
Re: Escrow & Deficiency already
Shopgirl
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Diamond Poster
Joined: Aug 2003
Posts: 1,264
Southeast
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Is there anything else required to give the client other than the escrow analysis?
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#1802507 - 04/08/13 07:28 PM
Re: Escrow & Deficiency already
Shopgirl
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Joined: Jul 2001
Posts: 84,364
Galveston, TX
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The analysis is not the part the borrower needs to get.
You don't send a copy of the analysis as part of the escrow account statement? Those are required for every annual or short-year statement. You can't just adjust the escrow payment without providing an analysis.
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#1802676 - 04/09/13 02:29 PM
Re: Escrow & Deficiency already
Shopgirl
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Diamond Poster
Joined: Aug 2003
Posts: 1,264
Southeast
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Okay, gotcha now. So am I correct that if we wanted to spread the additional funds over the regular monthly payment then we would need the analysis forced. However, what if the client decides to make a lump sum payment? Would we still need to force an analysis now?
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#1802923 - 04/09/13 07:25 PM
Re: Escrow & Deficiency already
Shopgirl
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Diamond Poster
Joined: Aug 2003
Posts: 1,264
Southeast
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If the borrower makes the lump sum payment for the deficiency, this will carry the insurance policy payment for the remainder of the year. Then a new analysis will occur and that is when his payment should adjust to the new payment if the premium remains the same, correct? Sorry, hope that helps explain a little more.
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#1803008 - 04/09/13 08:36 PM
Re: Escrow & Deficiency already
Shopgirl
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10K Club
Joined: Jul 2001
Posts: 84,364
Galveston, TX
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Or, just contact the borrower and ask them what they would like to do. If they want to pony up the $400 - let them. But also let them know if they do not, you will be raising their monthly payment to cover the additional charge either now or the beginning of the next escrow year.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1803137 - 04/10/13 01:33 PM
Re: Escrow & Deficiency already
Shopgirl
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Diamond Poster
Joined: Aug 2003
Posts: 1,264
Southeast
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Yes, the borrower is making the $400 deficiency payment now, so sounds like I don't need to do the anaylsis now. Thanks Randy and Truff......
Last edited by Shopgirl; 04/10/13 01:33 PM.
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#2253957 - 05/14/21 07:15 PM
Re: Escrow & Deficiency already
rlcarey
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Diamond Poster
Joined: Oct 2015
Posts: 1,671
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The analysis is not the part the borrower needs to get.
You don't send a copy of the analysis as part of the escrow account statement? Those are required for every annual or short-year statement. You can't just adjust the escrow payment without providing an analysis. Is there a Regulatory basis for the last sentence? I could not find anything in RESPA that prohibits this. As an example, let's say a servicer performs their annual escrow account analysis in March, but then figures out in May that the projected disbursement was materially underestimated. Therefore, the servicer wants to increase the escrow payment going forward. Are they obligated to do a short-year analysis? I can't find anything that says "yes" to that question.
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#2253978 - 05/15/21 02:17 PM
Re: Escrow & Deficiency already
Shopgirl
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10K Club
Joined: Jul 2001
Posts: 84,364
Galveston, TX
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1024.17(i)(4) Short year statements. A servicer may issue a short year annual escrow account statement (“short year statementâ€) to change one escrow account computation year to another. By using a short year statement a servicer may adjust its production schedule or alter the escrow account computation year for the escrow account.
You can't just change their payment. How would you ever know or prove you where not violating the allowable cushion?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2253991 - 05/17/21 01:56 PM
Re: Escrow & Deficiency already
Shopgirl
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Diamond Poster
Joined: Oct 2015
Posts: 1,671
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I know it's the logical thing to do, but I just don't see it specifically required by RESPA.
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#2254000 - 05/17/21 02:48 PM
Re: Escrow & Deficiency already
Shopgirl
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10K Club
Joined: Jul 2001
Posts: 84,364
Galveston, TX
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OK - if you think you can just change a required escrow payment without doing a new analysis and properly notifying the customer of any shortage and the new payment required and prove that you are not violating your allowed cushion - show me where it says you can do it.
This is not a argument you are going to win with any regulator.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2254002 - 05/17/21 03:00 PM
Re: Escrow & Deficiency already
Shopgirl
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Power Poster
Joined: Nov 2004
Posts: 3,275
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1024.17(f)(1)(ii)
(ii) The servicer may conduct an escrow account analysis at other times during the escrow computation year. If a servicer advances funds in paying a disbursement, which is not the result of a borrower's payment default under the underlying mortgage document, 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 under this paragraph (f).
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#2254172 - 05/20/21 05:27 PM
Re: Escrow & Deficiency already
Shopgirl
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Diamond Poster
Joined: Oct 2015
Posts: 1,671
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That wouldn't have happened yet, rainman. Again, I understand your point RL. Thank you for the input.
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#2254252 - 05/22/21 06:42 PM
Re: Escrow & Deficiency already
Shopgirl
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10K Club
Joined: Oct 2000
Posts: 27,763
On the Net
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Delivery is required, Randy's cite plus (i):
(i) Effect of short year statement. The short year statement shall end the “escrow account computation year†for the escrow account and establish the beginning date of the new escrow account computation year. The servicer shall deliver the short year statement to the borrower within 60 days from the end of the short year.
Last edited by Andy_Z; 05/22/21 06:43 PM.
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