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#2231265 - 02/19/20 03:44 PM Escrow Surplus and Delinquent Loans
Lizzyp Offline
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Joined: Dec 2017
Posts: 15
May a Financial Institution apply Escrow Surplus funds to Delinquent Loan payments under Reg X?

Customers are past due more than 30 days and/or going into Foreclosure.

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#2231266 - 02/19/20 03:49 PM Re: Escrow Surplus and Delinquent Loans Lizzyp
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 78,618
Galveston, TX
You can net the escrow balance when quoting a payoff, but you can't use an escrow balance to make loan payments.
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#2231303 - 02/19/20 06:52 PM Re: Escrow Surplus and Delinquent Loans Lizzyp
stach23 Offline
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Joined: Nov 2019
Posts: 20
If the borrower is entitled to a refund of an escrow surplus, if the borrower is more than 30 days delinquent, the bank can keep the surplus, but can't setoff against it.

Per 1024.17(f)(1)(2)(ii): These provisions regarding surpluses apply if the borrower is current at the time of the escrow account analysis. A borrower is current if the servicer receives the borrower's payments within 30 days of the payment due date. If the servicer does not receive the borrower's payment within 30 days of the payment due date, then the servicer may retain the surplus in the escrow account pursuant to the terms of the federally related mortgage loan documents.
Last edited by stach23; 02/19/20 07:04 PM.
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#2231889 - 02/27/20 03:55 PM Re: Escrow Surplus and Delinquent Loans Lizzyp
Cbigun Offline
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Joined: May 2016
Posts: 153
What if this is a Commercial Account and not a FRM loan? Do all the escrow rules still apply even though it is not a consumer account?

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