Home Loans

An escrow account is established to hold money collected by your lender to pay your hazard insurance (homeowners insurance), mortgage insurance (PMI) and property taxes when they become due.

Your monthly mortgage payment includes an amount, approximately 1/12 of the anticipated total annual tax and insurance due. This account may contain a cushion, also referred to as a reserve.

The cushion is a required dollar amount to remain in the escrow account to offset unanticipated increases in the property tax amounts or insurance premiums. This amount cannot exceed 1/6th of the total amount of items paid out of the escrow annually.

A shortage occurs when your escrow account does not have sufficient funds to pay for property taxes and/or insurance premiums. Unexpected increases to the items paid through your escrow account can cause a shortage. For example: if property taxes increase from the prior year, your escrow account must fund the full amount due. The difference would be included in the shortage amount. You will have two options to pay the shortage:

1. Pay the shortage amount in one full lump sum. Typically, your monthly mortgage payment will still increase but for a lower amount than when choosing option 2. If you would like to pay your shortage in full, please contact the Mortgage Servicing department, no later than February 26th, 2025 to allow time for escrow analysis to be re-ran. 989.249.8200, ext. 1004.
2. Pay the shortage amount monthly with your mortgage payment. The shortage will be spread over 12 months and added to the monthly payment. This will happen automatically as part of the escrow analysis process.

Yes. If any annual disbursements change, the monthly collection amounts will be calculated based on the new amounts due.

An overage occurs when your escrow account has more funds than required at the time of the analysis. For example: if your insurance premium decreased from the year prior, the premium amount paid would be less than anticipated. The difference would be included in an over amount. The overage amount will be refunded in one of two ways:

1. If the overage is less than $50, the funds will remain in the escrow account.
2. If the overage is over $50, and your loan is current a refund check for the overage amount will be included with Annual Escrow Account Disclosure Statement and mailed to you.
   • The overage amount cannot remain in the escrow account or be treated as a prepayment of escrow funds. Real Estate Settlement Procedures Act (RESPA) requires the overage funds to be sent back to you.

An escrow analysis of your escrow account is completed annually to determine if sufficient funds are being collected. You will receive the results to the escrow analysis on an Annual Escrow Account Disclosure Statement.

The second page of the Annual Escrow Account Statement includes an account history detailing actual deposits and disbursements from the escrow account since your previous analysis.

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