Mortgage Services
By: Sharon White | Posted: 25th January 2007
Mortgage services provided by many banks involve many activities from both bank and customers’ sides.
Ultimately, mistakes are made by companies, during the loan closing process or transfer process and the resolution of these issues are critical since they affect the economics of the borrower. Borrowers are made aware at closing, how much money will be allocated for their tax payments, an escrow deposit, and their payment amounts. Unfortunately it is up to the companies that obtain their business to carefully collect the funds and apply them appropriately. When this does not happen it is a problem for the borrower.
The biggest leading problem recognized in this process are Escrow Discrepancies. At closing, an estimate is calculated based on property value for taxes and the amount that should be insured to protect the borrower for Hazard Insurance. The funds are calculated and divided into twelve payments, which are listed on the Escrow Disclosure Statement. This document is to be reviewed at closing with the borrower and requires a signature that they acknowledge the details. Additionally, a Uniform Settlement Statement otherwise known as the HUD-1 or HUD-1 A is a mandatory document to be disclosed to the borrower. This provides all costs involved in the closing process ranging from the application, fees paid outside of the closing or POC, and the accounting involved in collecting Escrow Reserves from the borrower.
The Escrow Reserves collected at closing are the amounts that are determined to be used to set up an Escrow Account for the borrower. If these calculations are inaccurate, a surplus or shortage can be collected and the Escrow Account can have issues starting from day one.
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Tags: accounting, signature, banks, borrowers, insurance, discrepancies, economics, mortgage services, escrow account, application fees, hazard insurance, hud, tax payments, masterpapers, sharon white