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Limits on Escrow Accounts

Answered by: 

Question: 
Is there a limit on the balance the bank can require the customer to place in the escrow account?
Answer: 

The servicer may charge the borrower an amount sufficient to pay the charges on the mortgaged property, such as taxes and insurance. An amount sufficient to pay is computed so that the lowest month end target balance projected for the escrow account computation year is zero ($0). In addition, the servicer may charge the borrower a cushion that shall be no greater than one-sixth (1/6) of the estimated total annual payments from the escrow account.
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Learn more about Jack Holzknecht’s webinar
2018 What’s All the Fuss About Escrows

First published on 03/11/2018

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