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Compliance Question of the Week
December 10, 2013
Dec. 10, 2013
Can the credit union require a borrower who has a less-than-stellar credit history to triple the amount of money that goes into the escrow account?
Section 17 of RESPA sets limits on the amounts that a lender may require a borrower to put into an escrow account for purposes of paying taxes, hazard insurance and other charges related to the property.
During the course of the loan, RESPA prohibits a lender from charging excessive amounts for the escrow account. Each month, the lender may require a borrower to pay into the escrow account no more than 1/12 of the total of all disbursements payable during the year, plus an amount necessary to pay for any shortage in the account. In addition, the lender may require a cushion, not to exceed an amount equal to 1/6 of the total disbursements for the year.
The lender must perform an escrow-account analysis once during the year and notify the borrower of any shortage. Any excess of $50 or more must be returned to the borrower.
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Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.
Posted in Compliance News.