FinancingTila_respa_regulationsMEDIUM
During the annual escrow analysis on Priya's loan, the servicer wants to maintain an escrow cushion equal to three months of projected tax and insurance disbursements. Under RESPA, what is the maximum cushion the servicer may generally maintain?
Correct Answer
C) Two months of projected annual disbursements
Under RESPA's escrow-account rule, the servicer may generally maintain a cushion no greater than one-sixth of the estimated total annual payments from the account. One-sixth of a year is two months, so a three-month cushion would be too high.
Answer Options
A
One month of projected annual disbursementsB
Three months of projected annual disbursementsC
Two months of projected annual disbursementsD
Any amount reasonably disclosed in the noteWhy This Is the Correct Answer
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Related Topics & Key Terms
Key Terms:
respaescrowcushionservicing
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