Escrow Balances: Handling surpluses and deficiencies

Each year, RESPA requires mortgage servicers to conduct an escrow account analysis to determine whether a surplus or deficiency exists. If one exists, the rule provides requirements for how the funds are to be returned to or collected from the borrower. This blog covers the rules for each of these scenarios.

Surpluses

A surplus exists when the amount in the escrow account exceeds the estimated amount necessary to cover the disbursements from the escrow account for the rest of the escrow year. If the escrow analysis reveals a surplus, section 1024.17(f)(2) provides servicers with two options, depending on the amount of the surplus:

• Surplus is $50 or more: amount must be refunded to the borrower within 30 days from the date of the analysis.

 

continue reading »