I have three questions on escrows....
1. Is it acceptable to deduct late fees from a borrower's surplus amount before cutting a check?
2. On loans with PMI do you deduct the PMI payment from your cushion (one months escrow payment) or include it?
3. Do you include the prior year's cushion information and a reason why a borrowers lowest monthly balance was greater than the cushion or do you just provide a number they call call with questions?

1. No, even if you are holding the escrow statement due to a current delinquency (§3500.17(i)(2)) I still see no allowance to debit the surplus for this (§3500.17(f)(2)(ii)) unless it is in your mortgage docs.
2. I didn't work with this, but I believe you'd factor this in because you are telling them their payment amount.
3. §3500.17(i)(1)(viii). I hadn't ever heard a phone number was acceptable? We listed the reason, briefly.