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#2228044 - 12/27/19 08:59 PM Escrow Payments
Lori Offline
Junior Member
Joined: Oct 2018
Posts: 36
We have a customer that is 2 years pass due, he is playing the bankruptcy game. My question is do I still have to pay his Homeowners out of his Escrow Acct. His Escrow Acct is in the negative because he is two years behind. What is the Escrow Rule on this. I cannot find anything on this topic.

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Escrows on Higher-Priced Mortgages
#2228046 - 12/27/19 09:11 PM Re: Escrow Payments Lori
Jim Schue Offline
New Poster
Joined: Jan 2017
Posts: 21
Yes, you are still required to pay the Homeowner's Insurance.

From 1024.17:

(5) Timely payment of hazard insurance. (i) In general. Except as provided in paragraph (k)(5)(iii) of this section, with respect to a borrower whose mortgage payment is more than 30 days overdue, but who has established an escrow account for the payment for hazard insurance, as defined in § 1024.31, a servicer may not purchase force-placed insurance, as that term is defined in § 1024.37(a), unless a servicer is unable to disburse funds from the borrower's escrow account to ensure that the borrower's hazard insurance premium charges are paid in a timely manner.

(ii) Inability to disburse funds. (A) When inability exists. A servicer is considered unable to disburse funds from a borrower's escrow account to ensure that the borrower's hazard insurance premiums are paid in a timely manner only if the servicer has a reasonable basis to believe either that the borrower's hazard insurance has been canceled (or was not renewed) for reasons other than nonpayment of premium charges or that the borrower's property is vacant.

(B) When inability does not exist. A servicer shall not be considered unable to disburse funds from the borrower's escrow account because the escrow account contains insufficient funds for paying hazard insurance premium charges.

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#2228047 - 12/27/19 09:11 PM Re: Escrow Payments Lori
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 77,591
Galveston, TX
I believe you are looking for 1024.17(k)(5)
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#2228048 - 12/27/19 09:17 PM Re: Escrow Payments Lori
Jim Schue Offline
New Poster
Joined: Jan 2017
Posts: 21
I should clarify there's a potential out if you're a small servicer and the force-placed premium is less than the customer's own policy. But yes, definitely read the entire citation Randy provided.

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#2228049 - 12/27/19 09:19 PM Re: Escrow Payments Lori
Lori Offline
Junior Member
Joined: Oct 2018
Posts: 36
thanks

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