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Escrow Accounts, Taxes and the Regulation

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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?

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 10/25/10

First published on 10/25/2010

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