Carrying Escrows Forward

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Question:

We have several real estate loans that we are refinancing. The existing loans have escrows. The new loans will have escrows as well. What kind of a procedure do we need to go through to transfer the escrow balances to the new loan: Do we need to do a short year escrow analysis on the old loan and an initial escrow disclosure on the new loan?

Answer:

Escrows are tied to a loan. If the loan is paid off (whether to a different bank or refinanced at the same bank), then the escrow should be closed and a short-year statement [as outlined in 24 CFR 3500.17(i)(4)(iii)] is required.

First published on BankersOnline.com 08/16/04