12 CFR §1024.17 — Escrow accounts
Regulation X §1024.17 governs escrow accounts: 1/12 monthly + 1/6 cushion payment limit, aggregate accounting, no pre-accrual, initial escrow account statement at settlement or within 45 days, annual escrow account statement within 30 days of computation-year end, $50/30-day surplus refund rule, timely disbursements on or before the deadline to avoid a penalty.
Verbatim regulatory text
Verbatim provisions from 12 CFR §1024.17 — Escrow accounts — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
12 CFR §1024.17(c)(1)(ii) — Monthly escrow payment limit
(ii) Charges during the life of the escrow account. Throughout the life of an escrow account , the servicer may charge the borrower a monthly sum equal to one-twelfth ( 1/12 ) of the total annual escrow payments which the servicer reasonably anticipates paying from the account. In addition, the servicer may add an amount to maintain a cushion no greater than one-sixth ( 1/6 ) of the estimated total annual payments from the account. However, if a servicer determines through an escrow account analysis that there is a shortage or deficiency, the servicer may require the borrower to pay additional deposits to make up the shortage or eliminate the deficiency, subject to the limitations set forth in § 1024.17(f) .
12 CFR §1024.17(c)(2) — Initial escrow analysis required at account creation
(2) Escrow analysis at creation of escrow account. Before establishing an escrow account , the servicer must conduct an escrow account analysis to determine the amount the borrower must deposit into the escrow account (subject to the limitations of paragraph (c)(1)(i) of this section), and the amount of the borrower's periodic payments into the escrow account (subject to the limitations of paragraph (c)(1)(ii) of this section).
12 CFR §1024.17(c)(4) — Aggregate accounting method required
(4) Aggregate accounting required. All servicers must use the aggregate accounting method in conducting escrow account analyses.
12 CFR §1024.17(c)(6) — Pre-accrual prohibited
(6) Restrictions on pre-accrual. A servicer must not practice pre-accrual .
12 CFR §1024.17(f)(2)(i) — Surplus refund: $50 / 30-day rule
(i) If an escrow account analysis discloses a surplus , the servicer shall, within 30 days from the date of the analysis, refund the surplus to the borrower if the surplus is greater than or equal to 50 dollars ($50). If the surplus is less than 50 dollars ($50), the servicer may refund such amount to the borrower, or credit such amount against the next year's escrow payments.
12 CFR §1024.17(g) — Initial escrow account statement at settlement or within 45 days
(g) Initial escrow account statement —(1) Submission at settlement, or within 45 calendar days of settlement. As noted in § 1024.17(c)(2) , the servicer shall conduct an escrow account analysis before establishing an escrow account to determine the amount the borrower shall deposit into the escrow account , subject to the limitations of § 1024.17(c)(1)(i) . After conducting the escrow account analysis for each escrow account , the servicer shall submit an initial escrow account statement to the borrower at settlement or within 45 calendar days of settlement for escrow accounts that are established as a condition of the loan.
12 CFR §1024.17(i) — Annual escrow account statement within 30 days of computation year end
(i) Annual escrow account statements. For each escrow account , a servicer shall submit an annual escrow account statement to the borrower within 30 days of the completion of the escrow account computation year . The servicer shall also submit to the borrower the previous year's projection or initial escrow account statement . The servicer shall conduct an escrow account analysis before submitting an annual escrow account statement to the borrower.
12 CFR §1024.17(k)(1) — Timely escrow disbursements
(1) If the terms of any federally related mortgage loan require the borrower to make payments to an escrow account , the servicer must pay the disbursements in a timely manner, that is, on or before the deadline to avoid a penalty , as long as the borrower's payment is not more than 30 days overdue.