HUD Is Monitoring Escrow Management Procedures
While the debate about reform of the Real Estate Settlement Procedures Act centers around compensation of loan originators, servicers need to remember that RESPA covers loan administration as well.
Particularly, RESPA contains regulations pertaining to the management of mortgage escrow accounts for paying taxes and insurance.
Sections 6 and 10 of RESPA provide consumers with certain rights regarding the servicing of their escrow accounts.
In an advisory to consumers on HUD's website (www.hud.gov), the department advises consumers that if they have questions or problems with the servicing of their loan, the servicer is required to respond within 60 days of receiving a complaint.
In addition, loan servicers are required to notify borrowers at least 15 days prior to a servicing transfer that a transfer will take place. The notice must include the effective data of the transfer, the name, address and toll-free or collect-call phone numbers for the new servicer, information about whether or not optional insurance can be continued, and a statement that the transfer does not affect the terms or the conditions of the mortgage.
RESPA also governs escrow accounts.
It does not require servicers to maintain escrow accounts for property taxes and hazard insurance. It does include guidelines regarding servicer management of escrow accounts, requiring that servicers make timely payment of tax and insurance bills.
Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.mortgageservicingnews.com