An annual escrow analysis shows a surplus of $73 on an account that is current. What must the servicer do with the $73 surplus, and by when?
Correct Answer
B) Refund it within 30 days: the surplus is at or above the $50 line
B. Refund the $73 surplus within 30 days of the analysis. The borrower is current and $73 exceeds the $50 threshold. The required refund is the full surplus, not just the $23 above the threshold. No written request is required. Scope and exceptions: Below $50, the rule permits either a refund or credit against the following year’s escrow payments. Current status has its own regulatory definition. A surplus is the excess over the target balance, not simply any positive escrow balance. Source: Section 1024.17(b) and (f)(2)(i)–(ii) — https://www.consumerfinance.gov/rules-policy/regulations/1024/17/
Why This Is the Correct Answer
B. Refund the $73 surplus within 30 days of the analysis. The borrower is current and $73 exceeds the $50 threshold. The required refund is the full surplus, not just the $23 above the threshold. No written request is required. Scope and exceptions: Below $50, the rule permits either a refund or credit against the following year’s escrow payments. Current status has its own regulatory definition. A surplus is the excess over the target balance, not simply any positive escrow balance.
Why the Other Options Are Wrong
Option A: Hold it as an addition to the cushion for the coming year
Keeping this surplus as an extra cushion does not satisfy the refund requirement.
Option C: Refund it only if the borrower asks in writing within 30 days
It adds an unsupported borrower-request condition.
Option D: Credit it against the next payment, since $73 is under the $100 line
It substitutes a $100 threshold and an impermissible credit alternative on these facts.
Exam Tip
For a current borrower, $50 or more means refund the entire surplus within 30 days.
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