We are new to the escrow process compliments of Bigger Waters. The reg defines timely payments as - on or before the deadline to avoid a penalty. We will only be escrowing for flood insurance premiums, not taxes with available discounts for early payment. What is the industry practice for insurance disbursements? Does everyone pay a week or even a month in advance of the premium due date? Or is it acceptable to disburse on the actual due date?

You need to ensure that the payments are received before the deadline to avoid a penalty. That's it. You can't pay the month prior or it will throw off the escrow calculation. However, you can pay any time during the month it is due since the escrow rules use "month end accounting". Does that make sense?

Perfect sense. Thank you!

Just a poke to the ribs -- the reference to the law is "Biggert-Waters," not Bigger Waters. But I like your version better, given the topic.

We had a lot of trouble when we first started escrowing, because about half of those new policies were due in the first few days of the month. So, we started paying them when we received the bill, which was the month before they were "due". Yes, it reset the escrow disbursement year, but what do you do about an insurance policy that's due the 1st through the 8th?

If it's due early in the month (1st or 2nd or maybe a few days more because of a weekend) and you have to have it to the insurer or county, then it's understandable that you need to make the payment in the prior month. If it's due on the 8th, I don't think you have justification to paying it the month prior. Why wouldn't you be paying it on the 1st or 2nd (of the same month). To push it a month earlier throws off the escrow calculation.

Same topic different question:
The Account History model (from 1995) provides an asterisk with the disbursement amount indicating a difference from a previous estimate. There is an additional explanation on the bottom of the form that states:

"Your actual lowest monthly balance was greater than $___. The items with an asterisk on your Account History may explain this. If you want a further explanation, please call our toll-free number."

Is this statement required for that scenario or is it just allowed?

That exact wording is NOT required. §1024.17(i)(1) requires an explanation of "If applicable, the reason(s) why the estimated low monthly balance was not reached, as indicated by noting differences between the most recent account history and last year’s projection." The model gives a sample way to do that.