[Anonymous]

Is there a requirement that we notify the borrower that their escrow account can be cancelled after 5 years if it meets the LTV requirement?

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[KCapps]

Based on my understanding of the regulation I don’t believe that a bank is required to notify a borrower that they can cancel their escrow after five (5) years.

The regulation states that the bank may cancel an escrow if at the earlier of either:
(A)Termination of the underlying debt obligation; or
(B)Receipt no earlier than five years after consummation of a consumer’s request to cancel the escrow account.

If the bank receives a consumers request then:

The borrower must request the cancellation of the escrow account only aand they satisfy the follwoing conditions: (A)The unpaid principal balance is less than 80 percent of the original value of the property securing the underlying debt obligation; and
(B)The consumer currently is not delinquent or in default on the underlying debt obligation.

Reference : § 1026.35(b)(3)(ii)

[Author]

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