Let’s say you have an escrow account that has a surplus, and the borrower is past due on their loan. Can you take the surplus from the escrow and apply it to the loan amount? Remember when it comes to escrow accounts, it’s not your money! You don’t have a right to tell the customer what to do with surplus money. So, if they’re past due, RESPA says you can hold onto the surplus; and when the loan becomes current, then you can give it to customer. The bottom line is you can’t require that they apply the surplus to their past due loan. It’s not your money!
If you have a request for a payoff, can you net the escrow against the principal and interest? The general rule of ‘it’s not your money’ would make you think the answer is no; but in 2014, HUD changed this rule and allowed you to net the escrow.
How do you net the escrow for an in-house refinance? That’s the kind of thing we’re going to be talking about during an upcoming webinar called All About Escrows on February 19th. We’ll get into the weeds about surpluses, and deficiencies, and shortages as well as the initial escrow account disclosure, the annual escrow statements, and short year statements. We’ll also discuss the escrow account computation year and month-end accounting, which is another confusing term that is not defined in the regulation. Register today for All About Escrows on February 19th, and we will demystify escrows in plain English!
David’s banking career began as a field examiner for the FDIC in 1990. He later became a Compliance Officer and Loan Officer for a small bank. In 1993, he established Banker’s Compliance Consulting. Along with his amazingly talented Team, he has written numerous compliance articles for prestigious banking publications and has developed compliance seminars that Banker’s Compliance Consulting produces.
He is an expert in compliance regulations. He is also a motivational speaker and innovative educator. His quick wit and sense of humor transforms the usually tiring topic of compliance into an enjoyable educational experience. David is on the faculty of the American Bankers Association National Compliance Schools and has served on the faculty of the Center for Financial Training for many years. He also is a frequent speaker at the ABA’s Regulatory Compliance Conference. He is also a trainer for hundreds of webinars, is a Certified Regulatory Compliance Manager (CRCM) and has been a BankersOnline Guru for many years. The American Bankers Association honored David with their Distinguished Service Award in 2016.
David and his wife Karen have three adult children, four grandchildren (none of whom live at home!) and two cats (of which Dave is allergic … the cats, not the children!). They recently moved to an acreage outside of Lincoln, Nebraska where he gets to play with his tractor. When possible David can be found fishing, making sawdust in his shop, or playing the guitar and piano. He also enjoys leading worship at his church.