Because of the change in the new tax laws, in Minnesota we were allowed to get a tax benefit if we paid 2018 taxes before the end of the year in 2017. Which as you can image it caused several borrowers to receive refund during their escrow analysis and reduced their escrow payments. Now we are six months out from making a tax payment in 2019 and we know those borrowers will be short. Is there any issue with performing a short year analysis now to prevent those borrowers from having a huge payment shortage? I guess I was kind of concerned about the language within 1024.17(I)(4)

A servicer may issue a short year annual escrow account statement (“short year statement”) to change one escrow account computation year to another. By using a short year statement a servicer may adjust its production schedule or alter the escrow account computation year for the escrow account

Does this mean that I can’t run a short year escrow analysis now and then keep the annual escrow analysis in May?

You can always run a short year statement. When you do, you capture the next 12 months as your "escrow account computation year". That will give the borrower a "heads up" to the upcoming shortage and allow you to begin catching up for it.

You can also run another short year statement next May to get them back on their "regular" year, but you don't have to. It's totally up to your institution.