Q: If there is a deficiency that is equal to or more than one month’s escrow account payment, can the servicer accept a voluntary, unsolicited lump sum payment from the borrower to resolve the deficiency?
A: (UPDATED 6/2/2021): Yes, if there is a deficiency that is equal to or more than one month’s escrow account payment, the servicer may accept an unsolicited lump sum payment to resolve the deficiency. However, the servicer cannot require or provide the option of a lump sum payment on the annual escrow account statement. The annual escrow statement may only reflect that the servicer is allowing a deficiency to exist or that the servicer is requiring the borrower to repay the deficiency in two or more equal monthly payments. 12 CFR § 1024.17(f)(4)(ii).
Regulation X does not govern whether borrowers can voluntarily make payments to the servicer for the purpose of satisfying an escrow account deficiency. Hence, a voluntary, unsolicited payment to the servicer to satisfy an escrow account deficiency equal to or more than one month’s escrow account payment by the consumer is not a violation of Regulation X as long as such information is not included on the annual escrow account statement and does not appear to indicate that a lump sum payment is something that the servicer requires, but that it is an entirely voluntary option for the borrower.