12 U.S.C. §2609 — Limitation on requirement of advance deposits in escrow accounts
RESPA escrow-account statute. Imposes (a) limits on the aggregate deposit a lender may require at settlement and the monthly deposit afterward, plus the one-sixth cushion ceiling; (b) at-least-annual shortage notification by the servicer; (c) initial escrow statement (closing or 45 days after account established) and annual escrow statement (within 30 days after each 12-month cycle); and (d) civil penalties for non-delivery of subsec (c) statements.
Verbatim regulatory text
Verbatim provisions from 12 U.S.C. §2609 — Limitation on requirement of advance deposits in 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 U.S.C. §2609(a)(1) — Settlement-time escrow deposit limit
A lender, in connection with a federally related mortgage loan , may not require the borrower or prospective borrower—
12 U.S.C. §2609(a)(2) — Monthly escrow deposit limit (1/12 plus 1/6 cushion)
Provided, however, That in the event the lender determines there will be or is a deficiency he shall not be prohibited from requiring additional monthly deposits in such escrow account to avoid or eliminate such deficiency.
12 U.S.C. §2609(b) — Notification of shortage in escrow account (at least annually)
If the terms of any federally related mortgage loan require the borrower to make payments to the servicer (as the term is defined in section 2605(i) of this title ) of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall notify the borrower not less than annually of any shortage of funds in the escrow account.
12 U.S.C. §2609(c)(1) — Initial escrow account statement
Any servicer that has established an escrow account in connection with a federally related mortgage loan shall submit to the borrower for which the escrow account has been established a statement clearly itemizing the estimated taxes, insurance premiums, and other charges that are reasonably anticipated to be paid from the escrow account during the first 12 months after the establishment of the account and the anticipated dates of such payments.
12 U.S.C. §2609(c)(2) — Annual escrow account statement
Any servicer that has established or continued an escrow account in connection with a federally related mortgage loan shall submit to the borrower for which the escrow account has been established or continued a statement clearly itemizing, for each period described in subparagraph (B) (during which the servicer services the escrow account), the amount of the borrower’s current monthly payment, the portion of the monthly payment being placed in the escrow account, the total amount paid into the escrow account during the period, the total amount paid out of the escrow account during the period for taxes, insurance premiums, and other charges (as separately identified), and the balance in the escrow account at the conclusion of the period.
12 U.S.C. §2609(a)(1) — Settlement-time escrow deposit limit — enumerated items (chapeau recall fix)
(1) to deposit in any escrow account which may be established in connection with such loan for the purpose of assuring payment of taxes, insurance premiums, or other charges with respect to the property, in connection with the settlement, an aggregate sum (for such purpose) in excess of a sum that will be sufficient to pay such taxes, insurance premiums and other charges attributable to the period beginning on the last date on which each such charge would have been paid under the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, and ending on the due date of its first full installment payment under the mortgage, plus one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period;