Mortgage Procedure


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Once the loan funds it is required to have an Escrow Analysis 45 days after the funding date. This is a requirement of RESPA, which are the laws enacted to ensure mortgage companies are accurately analyzing accounts and informing borrowers of the outcome of the analysis. This is a very useful tool for any consumer who has an Escrow Account with their mortgage. An analysis will determine if the correct amount of Escrow Cushion, which are the amounts required to have in the Escrow Account are present. If the cushion is not enough this will cause a shortage in the Escrow for the borrower.

Additionally, appropriate funds to cover an upcoming tax or insurance disbursements must be present. If a miscalculation occurs in this process, an overage or shortage will be present in the account. After the account is analyzed, the required amount to be in the Escrow Account is determined. The amount presently in the account is deducted from this amount, and if the figures are short then the borrower will be responsible for paying an increased payment to the Escrow in addition to their regular Escrow payment, for one year. These errors in calculation are caused by the wrong amounts being used to determine what needs to be collected into the account. This is not at fault of the borrower considering they rely on their mortgage companies to take care of their Escrow. Unfortunately, these types of errors are an economical set back for borrowers as often times they are not prepared for the shortage and the additional funds needed to bring the account up to par is taken out of their net income, or disposable income, which causes them to pay more than anticipated.

Funds that are due to the mortgage company from the title company also play a big role in the Escrow Analysis. If the funds are collected and not distributed properly, a problem arises for the borrower. Often times in this instance, if the Escrow Reserves are not received, it is required from the borrower to pay a deposit on their own. Although the funds are set up to be researched and collected from the title company, the duration of receiving them cause more issues for borrowers.

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