During an escrow analysis, the servicer discovers the borrower has been charged for both city and county property taxes, but only city taxes are actually due. The overpayment totals $2,400. How should this surplus be handled?
Correct Answer
B) Refund the entire surplus immediately to the borrower
Under RESPA Section 10, when a surplus exceeds $50, the servicer must refund the excess to the borrower within 30 days of the escrow account computation date. The servicer cannot retain surpluses or arbitrarily apply them to future payments without borrower consent.
Why This Is the Correct Answer
Under RESPA Section 10, when a surplus exceeds $50, the servicer must refund the excess to the borrower within 30 days of the escrow account computation date. The servicer cannot retain surpluses or arbitrarily apply them to future payments without borrower consent.
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A purchase transaction closing is scheduled for the 29th of the month, but the seller requests to delay until the 3rd of the next month to avoid capital gains tax implications. The borrower's rate lock expires on the 30th. What is the most likely outcome?