An annual escrow analysis projects a $780 shortage. The borrower asks how it will be collected.
Correct Answer
D) Spread over 12 months at $65, or paid in a lump sum if she prefers
A shortage may be repaid over at least 12 months, and the borrower may pay it in one go instead. Other choices: demanding it at the next payment is not permitted for a shortage; 24 months is not the period; and escrow shortages are not capitalised into the principal balance. See 12 CFR 1024.17(f). Source: 12 CFR 1024.17(f)
Why This Is the Correct Answer
A shortage may be repaid over at least 12 months, and the borrower may pay it in one go instead. Other choices: demanding it at the next payment is not permitted for a shortage; 24 months is not the period; and escrow shortages are not capitalised into the principal balance. See 12 CFR 1024.17(f). Source: 12 CFR 1024.17(f)
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