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#2192328 - 09/12/18 04:48 PM Escrow Shortages
deltacrcm Offline
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Previously, we did not allow customers to pay the necessary shortages to keep their escrow payments the same year to year. The customer does not want their monthly loan payment to change, so they request to pay the shortage so that their monthly escrow portion of the payment will the same.

Our escrow analysis person has been told it is okay to allow customers to pay the extra money so that they can keep their monthly payment the same each year. Our COO says this would be an issue because we would have more money in the escrow account than we were allowed to collect.

I am still learning the escrow requirements and am having trouble determining what the correct process should be.

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#2192391 - 09/12/18 10:31 PM Re: Escrow Shortages deltacrcm
rlcarey Online
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Galveston, TX
If they have a shortage - how would they have more in the account that allowed, if they make that payment? They would only be bringing their beginning balance to what it should be - of course you would have to run a new analysis.
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#2192434 - 09/13/18 02:14 PM Re: Escrow Shortages deltacrcm
deltacrcm Offline
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I should have clarified; I'm referencing instances when the customer's payments would have increased due to an increase in taxes or insurance, thus increasing their monthly payment.

For example, a customer's payments went up and made their base payment change from $100 to $120 a month. They also had a shortage which resulted in an increase of $20 a month to their new escrow base payment. Their new monthly escrow payment would be $140 and their cushion would be $280. They don't want their monthly loan payment to change, so they request to pay the shortage of $240 plus an additional $240 so that their monthly escrow portion of the payment will stay $100.

I realize that per 1024.17(f)(3) there are guidelines for making up a shortage, but when the taxes or insurance increase year to year and increase their monthly payment, can we allow them to pay the overage in order to keep their payments the same?
Or is our only option to increase their monthly payment? If this is something we can allow them to do, should we have the customer provide us with a signed statement that they requested to do this?

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#2192478 - 09/13/18 05:50 PM Re: Escrow Shortages deltacrcm
rlcarey Online
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rlcarey
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Galveston, TX
You can allow them to make voluntary escrow payments, but you still have to set the escrow payment based on the latest escrow analysis. How you coordinate this with your normal escrow analysis cycle is a little beyond me.
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#2192906 - 09/18/18 02:38 PM Re: Escrow Shortages deltacrcm
deltacrcm Offline
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One more related question:

1024.17(ii)(1)(viii) - "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."

According to this, are we expected to give detailed reasons for differences in actual history and projections? Or will an asterisk indicating a difference in payment or timing of payment changes suffice?

In the few examples I could find online, I did not see any where actual differences were explained in detail.

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#2192951 - 09/18/18 05:10 PM Re: Escrow Shortages deltacrcm
David Dickinson Offline
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Central City, NE
There's no good guidance on this, but you're right that the model forms don't provide any specific details. The "asterisk indicating a difference . . ." seems to work.
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#2192953 - 09/18/18 05:14 PM Re: Escrow Shortages deltacrcm
rlcarey Online
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rlcarey
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Galveston, TX
You need to pull up the Federal Register for February 15, 1995 and review the sample escrow statements that existed at that time in the Appendices to Regulation X. A lot of good information in them.
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