Last week, the CFPB published a few frequently asked questions (FAQs) documents regarding consumer protection rules. This blog post from last week discusses the Regulation E FAQs document that was issued. Today’s blog will discuss the Real Estate Settlement Procedures Act (RESPA) FAQs document, which describes a few of the requirements found in Part 1024 or Regulation X. The document contains a lot of information, but I will highlight just a few of the FAQs here.
We’ve occasionally received questions about the use of short year escrow statements under Reg X. Question 8 under the subsection “Escrow Accounts: General” describes the effect of using a short year escrow statement. As a reminder, section 1024.17(i)(4) provides: “By using a short year statement a servicer may adjust its production schedule or alter the escrow account computation year for the escrow account.” In other words, if a credit union would like to adjust the account computation year, perhaps to align all borrowers to the same schedule, it can do so by ending the current computation year early and sending a short year escrow statement. The bureau also describes situations that trigger a requirement to send a short year statement, such as transfer to another servicer or an account payoff.
The bureau also issued guidance on how credit unions should handle escrow account shortages in questions 4-6 under the section “Escrow Accounts: Deficiencies, Shortages, and Surpluses.” Section 1024.17(f)(3) provides that for an escrow shortage, the repayment options will depend on the amount of the shortage. For a shortage less than one month’s payment, a credit union:
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