Mortgage Servicing Escrow Accts Deficiencies Shortages Surpluses 5 – If there is a shortage …, can the servicer accept an unsolicited lump sum payment from the borrower to resolve the shortage?

Compliance > Regulation X and Z - Servicing
Q:   If there is a shortage that is equal to or more than one month’s escrow account payment, can the servicer accept an unsolicited lump sum payment from the borrower to resolve the shortage?
 
A:   (UPDATED 6/2/2021): Yes, if there is a shortage that is equal to or more than one month’s escrow account payment, the servicer may accept an unsolicited lump sum repayment to resolve the shortage. However, the servicer cannot require or provide the option of a lump sum payment on the annual escrow account statement. The annual escrow statement, which reflects the escrow account analysis, may indicate that a shortage can exist or that the borrower can repay the shortage in equal monthly payments over at least a 12-month period. 12 CFR § 1024.17(f)(3).
 
Also, Regulation X does not govern whether borrowers can voluntarily make payments to the servicer for the purpose of satisfying an escrow account shortage. Hence, the acceptance of a voluntary, unsolicited payment made by the borrower to the servicer to satisfy an escrow account shortage is not a violation of Regulation X.
 
 
This Q&A was contained in the CFPB’s Mortgage Servicing FAQs – version 3, as of June 2, 2021 (which may be updated from time to time).  This may be found on the CFPB’s website here:  https://files.consumerfinance.gov/f/documents/cfpb_mortgage-servicing_frequently-asked-questions.pdf
 

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