With the longer required escrow period for HPMLs before the borrower is allowed to cancel, we are trying to decide if we even want to allow the borrowers to cancel. While looking over some items, someone mentioned that if the bank will not allow someone to cancel the escrow once it is in place that it should be done through the contract (note or mortgage) and not just as a bank policy. I hadn’t thought about the contract issue and am not an attorney, but does anyone have any thoughts on if just not allowing the cancellation of escrows as a matter of bank policy is okay or if we need to put something in the contract? I really appreciate any thoughts on this. Thanks
When an escrow is in place you should have an escrow agreement with the borrower that outlines the rights and responsibilities of both parties. It would be appropriate for the escrow to explain when and the escrow can be cancelled.
If you currently are not using an escrow agreement, contact your loan origination software provider to see if one is available thought the LOS.