I received this today from one of the brokers that we use. I hadn't heard anything about this before today. Anyone have any idea what this is about?

Effective immediately we will be disclosing an extra month cushion for both the taxes and insurance in the escrow accounts. This is effective for any loans funding in March and the first payment is due in May. The State of Wisconsin made this change on the servicing rules. Please let me know if you have any questions. This is not an issue with the new GFE because there is not a tolerance limit on the escrow fee lines.

Can you ask this broker for chapter and verse on this change to the servicing rules?

I'm cutting and pasting that paragraph to my servicing manager to see if he's heard anything.

Just found out from the broker that it's them making the change, not anything mandated by new WI statutes.

Whew. Glad to hear that.

Now, how can a broker mandate a change to a bank? Don't they work for you?

They were previously only requiring one month reserve for escrow and now they are going to two months reserve.

I agree with TR - how can they make that call?? It would be totally up to the bank - not the broker on what the bank's products look like?????

We don't use them that often. We basically refer an application to them (for applications that don't qualify using our guidelines) and they underwrite the loan and the loan is closed in their name. We do our minimum stuff to get our fee, but other than that the loan is theirs. So based on that, wouldn't they have the right to change some terms of their loans?

I'm sure Randy and I both took it that the broker was closing the loan for you, not that it was their loan. If they're servicing the loan too, then they can set the cushion. To the best of my knowledge, two months is sop everywhere so they're just catching up to that. If they're transfering the servicing to you, you get to set the cushion you require.