Mortgage Servicing Escrow Accts Deficiencies Shortages Surpluses 9 – Can a servicer communicate to the borrower that the borrower may voluntarily provide a lump sum payment to satisfy an escrow deficiency if they choose to?

Compliance > Regulation X and Z - Servicing
Q:   Can a servicer communicate to the borrower that the borrower may voluntarily provide a lump sum payment to satisfy an escrow deficiency if they choose to?
 
A:   (UPDATED 6/2/2021): Yes, provided that the communication is not in the annual escrow account statement itself and does not appear to indicate that a lump sum payment is something that the servicer requires but rather is an entirely voluntary option. The specified repayment options in Regulation X are exclusive. Therefore, servicers cannot include in the annual escrow statement any options for repayment of deficiencies that are not specified in Regulation X, such as a lump sum payment option that is greater than or equal to one month’s escrow payment. 12 CFR § 1024.17(f)(4)(i) and (ii); 12 CFR § 1024.17(i)(vii).
 
Regulation X does not, however, prohibit a servicer from including other statements or materials in the same envelope as the annual escrow statement or in an entirely separate communication that provides general information regarding the operation of a borrower’s escrow account or additional guidance on ways in which a borrower may manage or make voluntary payments into their escrow account. 12 CFR § 1024.17(i)(3).
 
Regulation X does not govern whether borrowers can voluntarily make payments in any amount into the escrow account at any time. Hence, informing the consumer that voluntary payment of any amount to the servicer to satisfy the escrow account deficiency 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.
 
 
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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