Under RESPA, what is the maximum cushion a lender may require in an escrow account at loan closing?
Correct Answer
A) 1/6 of the total annual escrow disbursements
RESPA Section 10 limits the initial escrow account deposit to no more than 1/6 of the total annual escrow disbursements, which equals approximately 2 months of payments, but the regulation specifically states 1/6 of annual disbursements.
Why This Is the Correct Answer
RESPA Section 10 limits the initial escrow account deposit to no more than 1/6 of the total annual escrow disbursements, which equals approximately 2 months of payments, but the regulation specifically states 1/6 of annual disbursements.
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