Escrow with a Construction to Permanent Loan

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Question:

We are doing the construction phase of a construction to permanent loan. The loan will move into payments without a modification. It will require escrow. When do I give the initial escrow disclosure? Do I collect the escrow payment during the construction phase which is interest only?

Answer:

You need to provide the escrow disclosure within 45 days of establishing the escrow account. Here's an excerpt from our Lending Desk Top Reference Manual:

Upon completing the initial escrow account analysis, the servicer must prepare and deliver an initial escrow account statement to the borrower… [Section 3500.17(c)(2) - page 7011]

1. Timing:a. New loans:
…at settlement, or within 45 calendar days of settlement. [Section 3500.17(g)(1) - page 7014]

b. Existing Loans:
…within 45 calendar days of the date of establishment of the escrow account. [Section 3500.17(g)(2) - page 7014]

First published on BankersOnline.com 1/17/11