A servicer mistakenly applies a borrower's payment to principal instead of escrow, causing the escrow account to become deficient. The servicer discovers the error 45 days later. Under RESPA servicing rules, the servicer must:
Correct Answer
D) Correct the error promptly and not charge the borrower for any costs related to the error
Under RESPA servicing rules, when a servicer makes an error in payment application, they must correct it promptly and cannot charge the borrower for costs associated with the servicer's error. The borrower should not be penalized for the servicer's mistake in payment allocation.
Why This Is the Correct Answer
Under RESPA servicing rules, when a servicer makes an error in payment application, they must correct it promptly and cannot charge the borrower for costs associated with the servicer's error. The borrower should not be penalized for the servicer's mistake in payment allocation.
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