Dealing with Escrows: Regulatory Requirements Under Various Rules

Setting up and managing escrow accounts, also known as impound accounts, can be a daunting exercise. There are several regulatory rules that impose certain requirements, primarily under RESPA, which have detailed requirements around how to establish and maintain an escrow account for a consumer mortgage loan. The rules also place limitations on how much can be maintained in the account, and what to do if there is too much (surplus) or not enough (shortage or deficiency) in the account. Regulation Z (for Higher-Priced Mortgage Loan transactions) and the flood insurance regulations also have rules that require a lender to escrow for various items in certain instances. Then there are requirements under Reg. Z’s TRID rules that mandate how the initial escrow payments should be disclosed. Keeping these requirements straight can be a hassle – lenders must know which of the requirements applies in what circumstance, meaning the loan type. Not all the requirements apply to all real estate transactions, for instance.

It is clear that the regulatory agencies (and Congress) favor escrows, as they even out a borrower’s payment responsibilities and therefore lessen the likelihood of default. It’s important to get the rules right. This webinar will provide you with the information you need to understand the requirements, the laws, and the regulations that deal with escrow accounting. We'll discuss disclosure requirements and where escrow information will appear on disclosure forms, as well as general escrow mandates, among other information.