An HPML borrower's escrow account has a surplus of $2,400 at the annual analysis. The lender wants to retain $1,800 as a cushion for next year's projected shortfall. What is required?
Correct Answer
A) May retain up to $1,200 (two months of escrow payments) as cushion
Under RESPA Section 1024.17(f), escrow accounts may retain a cushion of up to 1/6 of the total annual disbursements (approximately 2 months of payments), regardless of projected shortfalls. Excess amounts above this cushion must be returned to the borrower within 30 days.
Why This Is the Correct Answer
Under RESPA Section 1024.17(f), escrow accounts may retain a cushion of up to 1/6 of the total annual disbursements (approximately 2 months of payments), regardless of projected shortfalls. Excess amounts above this cushion must be returned to the borrower within 30 days.
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