(i) If the default is less than a monthly payment per escrow account, the service provider must: (i) As set out in § 1024.17(c)(2) and (3), the service provider must perform an analysis of the escrow account when creating an escrow account and after the end of the year in which the escrow account is calculated. The position of the escrow account or a separate item refers to any separate category of expenses, such as « taxes » or « insurance », for which funds are collected in the escrow account for withdrawal. An escrow account item with instalment payments, e.B local property taxes, remains an escrow account item, regardless of multiple payment dates to the tax authority. (i) Annual escrow records. For each escrow account, a service provider will provide the borrower with an annual escrow statement within 30 days of the end of the year in which the escrow account is calculated. The service provider also provides the borrower with the previous year`s forecast or the first escrow account statement. The service provider conducts an escrow account analysis before submitting an annual escrow account statement to the borrower. The fiduciary analysis also lists the monthly payments collected and paid for the previous year and the planned year. This visually indicates when the lender sent the payment to the tax auditor or insurer. Taxes are usually paid twice a year, while insurance premiums are paid once a year.
The schedule also includes a threshold called the required low point balance or the minimum escrow balance required. Regardless of the variation in the name, this number indicates the lowest amount your account balance can reach, and it will be listed right after the final invoice for the 12-month period. (3) Identification of beneficiaries. The original escrow statement does not need to name a particular beneficiary if it contains sufficient information to identify the use of the funds. The corresponding entries include, for example: district taxes, risk insurance, condominium fees, etc. If a particular beneficiary,. B for example a tax office, receives more than one payment in the year of calculation of the escrow account, each payment and each payment date must be indicated in the statement. If there are several tax authorities or insurers, the declaration must specify each tax authority or insurer (for example.
B, « tourist taxes », « school taxes », « risk insurance » or « flood insurance », etc.). (a) General. This section sets out the requirements for an escrow account that a lender establishes as part of a federal mortgage. It sets limits on escrow accounts using calculations based on monthly payments and payments over the course of a calendar year. If an escrow account includes a biweekly payment period or a different payment period, the requirements of this section will be modified accordingly. A public guide entitled « Biweekly Payments – Example » provides examples of biweekly accounting and a public guide entitled « Annual Escrow Return – Example » provides examples of a 3-year accounting cycle that can be used in accordance with paragraph (c)(9) of this section. A public guidance document entitled « Consumer Disclosure for Voluntary Escrow Payments » provides a disclosure model that encourages, without being required to provide, initiators and service providers to consumers if the originator or service provider expects a significant increase in escrow disbursements after the first year of the loan. The information contained in this template format may be combined with or included in the initial escrow account statement required in § 1024.17 (g). (2) the calculation of the borrower`s monthly payments for the next year in which the escrow account is calculated and all deposits necessary for the establishment or maintenance of the account; and (iii) small service providers. Notwithstanding paragraphs (k)(5)(i) and (k)(5)(ii)(B) of this Division, and subject to the requirements of section 1024.37, a service provider that is considered a small service agent under 12 CFR 1026.41(e)(4) may purchase compulsory insurance and charge the borrower for the cost of such insurance if the cost of compulsory insurance for the borrower is less than the amount of: that the small manager should pay from the borrower`s escrow account. Account to ensure that the premium costs of the borrower`s risk insurance have been paid on time. Scarcity refers to an amount whereby the balance of a current escrow account is less than the target balance at the time of escrow analysis.
(ii) If the default is greater than or equal to 1 month of escrow payment, the service provider may allow the default to exist and do nothing to change it, or may require the borrower to repay the default in two or more equal monthly payments. Accrual pre-accounting is a practice that some service providers use to require borrowers to deposit the funds necessary to pay and maintain a buffer in the escrow account some time before the payment date. Accrual pre-accounting is subject to the restrictions of § 1024.17(c). (l) Discretionary Payments. A borrower`s discretionary payment (p.B. life or disability insurance credit) made as part of a monthly mortgage payment must be shown on initial and annual statements. If a discretionary payment is introduced or terminated during the accounting year of the escrow account, this change should be noted on the next annual statement. A discretionary payment is not part of the escrow account unless payment is required by the lender as defined by the « Settlement Service » in § 1024.2 or the service provider chooses to place the discretionary payment in the escrow account. If a service provider has not established an escrow account for a federal mortgage and only receives payments for discretionary items, this section does not apply. (1) The following are the steps that service providers must take to determine whether their use of aggregate analysis complies with the restrictions of § 1024.17(c)(1). The steps in this section result in maximum limits. Service providers may use accounting procedures that result in lower target balances.
In particular, repairers can use a pillow that is below the authorized pillow or no pillow at all. This section does not require the use of a pillow. (c) repayment of advances. If a service provider transfers funds to an escrow account to ensure that the premium fees for borrower risk insurance are paid on time, a manager may require the borrower to repay the funds advanced by the manager, unless otherwise prohibited by applicable law. Instalment payment means one or more payments to be made to an escrow account item during an escrow account calculation year. An example of a instalment payment is when a jurisdiction charges taxes quarterly. (A) The service provider first projects a trial balance for the entire account in the following accounting period (trial balance). In doing so, the service provider assumes that it will make estimated payments no later than the deadline in order to benefit from discounts, if any, or the deadline to avoid a penalty. The Servicer does not use prepayment penalties on these payment dates. The service provider also assumes that the borrower will make monthly payments equal to one-twelfth of the estimated total annual payments in the escrow account. (9) Evaluations for periods of more than one year.
Some escrow account positions may be charged for periods of more than one year. For example, service providers may need to collect flood insurance or trust funds for water purification to be paid every three years. In such cases, the service provider estimates the borrower`s payments for a full payment cycle. For a flood insurance premium payable every 3 years, the service provider collects payments in the amount of 36 equal monthly amounts. However, in two of the three years, the account balance may not reach its low monthly balance because the low point is in a three-year cycle compared to an annual cycle. .