Mortgage Escrow Analysis Annual Statement
Annual Escrow Analysis
How do you keep track of how much money you have in escrow? Lenders are required to issue itemized statements of escrow analysis to borrowers within thirty days of the end of the year. Here's what you should get with your escrow analysis:
1. A copy of the previous year's escrow analysis or initial escrow account statement.
2. The annual escrow analysis statement must provide an account history, reflecting the activity during the escrow account computation year.
3. A projection of the activity in the account for the next year which is known as the escrow analysis. In preparing the statement, the lender will assume scheduled payments and disbursements will be made for the final two months of the escrow account computation year.
4. The amount of the borrower's current monthly mortgage payment and the portion of the monthly payment going into the escrow account.
5. The amount of the past year's monthly mortgage payment and the portion of the monthly payment that went into the escrow account.
6. The total amount paid into the escrow account during the past computation year.
7. The total amount paid out of the escrow account during the same period for taxes, insurance premium, and other charges.
8. The balance in the escrow account at the end of the period.
9. An explanation of how any surplus is being handled by the lender.
10. The escrow analysis will include an explanation of how any shortage or deficiency is to be paid by the borrower. There are a few options the lender has in collecting the shortage. First, they may require payment in full within sixty days. Or second they may spread the payments out over the next twelve months.
11. If the lender underestimated your escrow for the past year, the lender must provide an explanation of why the payments were not enough.
Tip: If there are excessive funds left in escrow, the extra money must be refunded to the borrower within 30 days of the analysis. Excessive is defined as greater than $50.00. For amounts less than fifty dollars the lender may refund the money or credit the amount against your next year's escrow payments.
What if you want to talk to someone about your escrow account? Contact your lender. This may get confusing if your original lender has sold your account
The best time to deal with escrow accounts is when you apply for a new mortgage. All lenders must disclose to you at the time of application the likely hood of the servicing for your loan being sold. That is, what is the chance that you will have to call a lender halfway across the country and in a different time zone? That may mean nothing to you, but it may mean a lot. You decide.
Tip: Many lenders will waive escrow requirements. Some charge an extra fee to do this but some don't if you have a large down payment. If you don't want to pay escrow, ask the lender about a waiver. But be careful. As was pointed out earlier in this article, escrow accounts were started for a reason. It is probably better for the average borrower to have an escrow account and not have to worry about coming up with several thousand dollars at year end. Remember, you can lose your house to a tax sale if you become too delinquent on your taxes.
One last thought about escrow accounts. What would local governments do if they had to individually collect taxes for each house in the county? The cost would be prohibitive and the result would be increased taxes for everyone.
When the lenders pay taxes they send one check with a list of all the taxpayers. Thus the county government gets maybe three or four hundred lender escrow checks that cover about 90% of the homeowners in the county.
Also, if taxes were collected individually, many homeowners wouldn't have the money when it came time to pay. The government couldn't afford to pay for the services the rest of us paid taxes for because everyone didn't pay their fair share. Think about it. And be sure to study your escrow analysis.
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