The low balance should be no more than 1/6 of the annual disbursements. Otherwise, there is a violation of 1024.17. An exception is permitted, though, if the borrower has specifically requested (in writing) a larger escrow payment amount, generally in order to anticipate escrow shock when real estate gets re-assessed for taxes after improvements. That request is only valid until the next annual escrow analysis/statement.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8