[compliancegirl]

Is it a violation of RESPA to include the PMI premium in the escrow cushion?
The only guidance I can find on this is Consumer Compliance Outlook Second Quarter 2009.
We have been including PMI premium in cushion, would we be required to refund this?

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[rcooper]

Including PMI is acceptable if it will be paid out of escrow. Take a look at question 3: https://portal.hud.gov/hudportal/HUD?src=%2Fprogram_offices%2Fhousing%2Framh%2Fres%2Frespafaq#TEM

Also see 12 CFR 1024.17(c)(1) which states “…In addition, the servicer may charge the borrower a cushion that shall be no greater than one-sixth (1/6) of the estimated total annual payments from the escrow account.”

[Author]

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