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#2076659 - 05/02/16 10:00 PM Escrow
lisawin Offline
Member
Joined: Sep 2015
Posts: 77
Mississippi
We have a customer that we sent an option to escrow flood and they decided to escrow. Now the customer would like to cancel the escrow of their flood insurance. Is this acceptable?

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Flood Compliance
#2076674 - 05/02/16 11:27 PM Re: Escrow lisawin
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Certainly. Get documentation and keep it.
_________________________
David Dickinson
http://www.bankerscompliance.com

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#2076726 - 05/03/16 02:51 PM Re: Escrow David Dickinson
Bville Offline
Diamond Poster
Bville
Joined: May 2001
Posts: 1,282
Out West
Is the reason escrow cancellation is allowed because the escrow was optional?

For loans made after 1/1/16 that require escrow, would the cancellation be allowed under any circumstances (unless perhaps another loan was allowed to be put in first lien position)? Is escrow required for life of loan as long as flood insurance is required? I don't recall the regulation mentioning this.

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#2076822 - 05/03/16 08:24 PM Re: Escrow lisawin
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Yes. Since the bank sent the "option" letter, this must not have been a loan they MIRE'd after 1/1/16. The bank gave the borrower the option to escrow for flood insurance, the borrower accepted and then cancelled. The HFIAA and regulation do not require escrows on loans prior to 1/1/16.

For loans after 1/1/16, flood insurance must be escrowed for the life of the loan, unless an exemption is encountered.
_________________________
David Dickinson
http://www.bankerscompliance.com

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