If a customer’s annual analysis shows a surplus of over $50.00 and they are more than 30 days past due, the Reg states that we can hold their refund in their escrow account but it does not state when we must release the surplus. If the customer becomes current, are we obligated to send them the surplus and if so is there a required time frame?

The regulation just states the following:

If the servicer does not issue an annual statement pursuant to this exemption and the loan subsequently is reinstated or otherwise becomes current, the servicer shall provide a history of the account since the last annual statement (which may be longer than 1 year) within 90 days of the date the account became current.

It doesn't say anything about redoing the escrow analysis or sending a surplus, thus at my bank we wait until the next escrow analysis is due and if the customer is current and there is still a surplus over $50 we would refund the customer at that time.

Thank you. The regulation appears to direct us to the loan documents for guidance in the situation mentioned. However, I didn't see anything in the documents that provided any real guidance. This may be a situation in which we need to come up with a procedure like you have done and follow that.