A borrower's escrow account has a projected shortage of $1,800 at the end of the escrow computation year. Under RESPA, what is the maximum monthly increase the servicer can implement to address this shortage?
Correct Answer
A) $150 per month ($1,800 ÷ 12 months)
Under RESPA Section 10, when there is a shortage, the servicer may spread the shortage amount over 12 months. The $1,800 shortage divided by 12 months equals $150 maximum monthly increase. The servicer cannot force payment over fewer months unless the borrower agrees.
Why This Is the Correct Answer
Under RESPA Section 10, when there is a shortage, the servicer may spread the shortage amount over 12 months. The $1,800 shortage divided by 12 months equals $150 maximum monthly increase. The servicer cannot force payment over fewer months unless the borrower agrees.
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