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With our bank’s Amish mortgages, we do get a policy with a premium amount (usually about $150) and we have been escrowing for this amount and sending to the “Bishop” in charge on an annual basis. These checks have gone uncashed (some for as long as 3 years) and we have recently received a call from the Bishop telling us to stop sending these checks, that they do not need them and stating that their fund is full. Trying to figure out how to properly handle the situation. 1) We can set annual premium to $0, in the event that if some sort of disaster depletes their fund and they need to start charging again. or 2) We would just not set the homeowner’s insurance up on escrow. We can return the funds to our customers that the checks have not been cashed without problem. I just wonder if it is going to be a problem with the regulators because the initial insurance document we got prior to closing has the $150 premium amount on there.
Anyone else have this situation??
There is nothing in RESPA or TILA that addresses anything like this.
Once the excess funds are returned to the individual escrow accounts the accounts will have a surplus that should be refunded to the borrower according to RESPA. When you do annual escrow disclosures, as required by RESPA, the estimated payment for the next year is $0. I think you will just go through with the charade of complying with RESPA rules each year.
I hope others chime in on this topic.
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