How do the rules in 12 CFR 1026.20(e) apply, if at all, to a situation where the borrower cancels escrow for one item, but not another? So, let's say the borrower wants to stop escrowing for Property Taxes, but the Escrow Account will remain open for collecting for Homeowners Insurance. Based on the Regulation, OIC, Final Rule, it seems like a notice would not be required in such a scenario. Would it be a good practice to provide a similar notice that has some of the same information, but is specific only to the item that is being canceled, i.e. the Property Taxes in this example?

No notice is required. You might consider sending a letter confirming the end of the escrow for taxes, reminding the borrower that timely of the taxes in nonetheless required under the terms of the mortgage, and offering to reinstate the tax escrow should the borrower have a change of opinion.

Thanks, John.