We currently do balloon loans. When the loan matures or we refinance that loan with new money, we do an entire new note/documents therefore the loan is considered a refinance. Our lenders conduct a new Initial Escrow Disclosure. Currently our operations department refunds the money in the escrow account to the borrower. Are we required to conduct a short year statement on these loans? Our operations department uses the same loan number therefore our processor says that it is not possible to conduct a short year statement as the loan is not actually paid out.
1024.17(i)(2)(4)(iii): Short year statement upon loan payoff. If a borrower pays off a federally related mortgage loan during the escrow account computation year, the servicer shall submit a short year statement to the borrower within 60 days after receiving the payoff funds.
You should check with your processor (if your contact isn’t providing the help you need talk to someone else) to see what needs to be done to in order to complete the short year statement.