Bankers Alliance Compliance Corner
Editor's Note: The following was submitted by Bankers Alliance. LBA, through its subsidiary Louisiana Bankers Service Corporation, has partnered with Bankers Alliance to give banks access to three compliance-related programs. Click here for more information.
Q: Regarding escrow shortages, is 12 months the maximum that we can spread a shortage out over?
A: Regulation X states that a shortage may be repaid over a minimum of 12 months, as set out here: “…If the shortage is less than one month’s escrow payment, then the servicer:
- May allow a shortage to exist and do nothing to change it,
- May require the borrower to repay the shortage amount within 30 days, or
- May require the borrower to repay the shortage amount in equal monthly payments over at least a 12-month period.
If the shortage is equal to or more than one month’s escrow account payment, then the servicer:
- May allow a shortage to exist and do nothing to change it, or
- May require the borrower to repay the shortage in equal monthly payments over at least a 12-month period. (12 CFR § 1024.17(f)(3).)
The specified repayment options in Regulation X are exclusive. Therefore, a servicer cannot include in the annual escrow statement any options for repayment of shortages that are not specified in Regulation X, such as a lump sum payment option for a shortage that is equal to or more than one month’s escrow payment. …” Click here for more information. Note that as always, the bank should also consider UDAP/UDAAP and fair lending implications when making these decisions.
Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933 or email info@compliancealliance.com and ask for the membership team.
Did you know that there is an exception to alphabetical order listings on the Loan Estimate?
- If the creditor is not able to itemize every service and charge due to the amount of space provided, the remaining charges can be combined into one sum.
- This sum will be listed as additional charges at the bottom of the alphabetized list within the section.
Review Alliance is an independent group of compliance specialists offering banks deep-dive audits of their existing transactions, recommendations about program enhancements or guidance on future safety and soundness. Virtual Compliance Officer was added in 2020—a new shared service-model using bank-dedicated compliance officers; perfect for monitoring and guiding your bank remotely. To learn how to put them to work for your bank, call (833)-683-0701or email info@bankersalliance.org and ask for the membership team.