Appendix I-3 of Respa shows an "illustrative" example of the annual Escrow Account Statement Disclosure. My question is do we have to state this exactly as shows or do we have some flexibility? We would like to show one projected monthly payment under the account history section and asterisk with a P footnoting it as a "projected payment" to account for the difference in ending and starting balances on the escrow statements. If we did this, we wouldn't want to state " This is a statement of actual activity in your escrow account, just maybe leaving out the work "actual". Thoughts?

Appendix I-3 of Respa

Do you have a link to this Appendix? I can't seem to find it in either Reg X or the Real Estate Settlement Procedures Act.

The format for the annual statement is outlined in Reg X's 1024.17(i) and (j).

The statement must show the actual activity for the current computation year and what the projected activity will be for the upcoming computation year. Our statements have sections for "Escrow Activity Summary" and "Escrow Projected Summary".

Under the activity summary it has columns for Payments, Disbursements and Escrow Balance. Under those columns are sub columns for Projected and Actual activity for the current computation year. Under the projection summary is shows what the projected payments and disbursements will be for the upcoming computation year.

Thanks Dan, sorry for the confusion. I should have identified this appendix as a HUD publication. The section of Respa that you reference refers user to this HUD example. The section of Respa states that "Public Guidance Documents entitled “Annual Escrow Account Disclosure Statement—Format” and “Annual Escrow Account Disclosure Statement—Example” set forth an acceptable format and methodology for conveying this information". These documents can be found at http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respagui.

So my question is, how closely do we have to follow this guidance? Under our current process, when g3enerating escrow analysis, the new payment effective date could be in the future to allow time for the member to be notified of the change in the escrow payment. Because of this, there may be a difference between the history ending balance under the account history section of the statement and the projections starting balance under projections for coming year, possibly causing customer confusion. Therefore, we would like to add a line of projected activity under the account history section so that the ending and starting balance coincide. We would add a "P" after the projection and footnote this item.

The cause of consternation with this is the statement that "this is a statement of actual activity..." We would like to change this to "this is a statement of activity" but were unclear whether we can deviate from the example.

Anytime we are given a model, you should follow it. I'm not saying you will be in violation of RESPA, but examiners expect you to follow it - to the "T". If you don't, you can argue it's "illustrative", but that can be easily challenged.

Here's a link to the appendices :
http://www.hud.gov/offices/hsg/ramh/res/respagui.cfm

Try using I-5 (or another that may fit your situation) instead of I-3.

Rosie, I agree with David in that you should not deviate from the intent of the models if possible.

I think the following from 1024.17(i) should help alleviate your concern using "actual".

In preparing the statement, the servicer may assume scheduled payments and disbursements will be made for the final 2 months of the escrow account computation year.

IOWs your "actual" activity assumes the payments are made, you do not assume they will not be made.

Thank you both!