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Escrow Accounts, Taxes and the Regulation

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Question: 
There has been some question about whether after the first year an escrow account is set up if a lender can collect one full year (instead of monthly) of taxes and insurance up front? Can a lender do that according to the Reg? If that is true, can you tell me exactly where to find that language in the reg?
Answer: 

If the loan is covered by RESPA, the lender cannot collect more than a monthly payment equal to 1/12th of the total annual payments, plus retain a cushion of 1/6th of the annual payment. (3500.17(c)(1)(ii))

First published on BankersOnline.com 10/25/10

First published on 10/25/2010

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