Boy oh boy, Indiana law is so difficult to research.

Does anyone know if we are allowed to charge a fee for servicing an escrow account?

Yes you are allow to charge an escrow servicing fee.

This is from the Analysis and Commentary:

X.A.: Escrow Requirements

Indiana does not expressly regulate issues involving escrow accounts.

XI.E.: Permissible Third-Party Fees

First Lien Mortgage Loans

There are generally no restrictions on a lender's ability to charge reasonable third-party fees on a first lien mortgage loan.

Second Lien Mortgage Loans

Under the Uniform Consumer Credit Code ("UCCC"), a lender may assess charges for official fees and taxes, property and liability insurance premiums, and bona fide and reasonable fees which are not for the purpose of evading the requirements and prohibitions of the UCCC for:

(1) title examination, abstract of title, title insurance, property surveys or similar purposes;

(2) fees for preparing deeds, mortgages, and reconveyance, settlement and similar documents (permissible only if the lender does not take a loan origination fee, see Section XI.E., above);

(3) notary and credit report fees;

(4) amounts required to be paid into escrow if such amounts are not otherwise required to be included in the loan finance charge; and

(5) appraisal fees.


See Ind. Code §24-4.5-3-202. Charges for other benefits conferred on the borrower may also be assessed, if such charges are approved by the Department of Financial Institutions. See id.

Thanks so much for your response dpersfull. However, I am still puzzled. You said, "This is from the Analysis and Commentary:..." Where do I find the Analysis & Commentary?

It's part of my Allregs subscription. I have never seen it before, but it has been a tremendous help to me.

Sorry...more questions:
1) How do I get an Allregs subscription?
2) My interpretation is that escrow servicing fees are okay only if they are 3rd party fees. In our case, we keep the servicing and monitor & pay the taxes/insurance ourselves (no 3rd party). So, would you agree that no 3rd party means we would not be allowed to charge such a fee?
3) If we did charge a fee, would we need to pay the customer interest?
4) Would commercial escrow fees be different from consumer escrows?
5) Would you like me to stop bothering you with questions? (ha, ha)
Thanks to you if you can steer me in the right direction...

1. Go to Allregs.com
2. If these are first mortgage loans, you may charge the escrow fee. They are considered part of the finance charge.
3. IN does not require interest on escrow accounts.
4. Do what you want on commercial accounts. (within reason of course)
5. Not at all.

I forgot to add to # 2 last night that I copied and pasted the wrong section. For allowable additional charges you need to look at Ind. Code §24-4.5-3-202. However, these apply to loans regulated by the DFI.

The IN DFI(at this time) does not regulate first mortgage loans and they do not regulate escrow accounts. The previous exam in 99 (which I was not at this bank at that time) and our recent 02 exam they did not look at a single first lien mortgage loan in the exam.

As I have said in previous IN post, the DFI is very helpful when you have questions. Their phone number is 317-232-3955.