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#2109309 - 12/01/16 05:11 PM Cancel escrow on Charged Off Loan
tryin2comply Offline
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Joined: Jun 2013
Posts: 90
We are getting ready to charge off a delinquent loan. There is an escrow account for this loan, with an excess balance. Taxes have been paid and insurance will not be due again until June, after the loan has been charged off. Are we required to go through the 30 day cancellation notice? Do we have to refund the excess balance that's in the escrow or could it be used to offset the delinquent amount of the charged off loan? I know escrow accounts must be used for escrow...when the loan is open. Does that apply to a charged off loan? Just wanted to double check if I've missed anything.

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Lending Compliance
#2109315 - 12/01/16 05:31 PM Re: Cancel escrow on Charged Off Loan tryin2comply
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 84,900
Galveston, TX
Charge-off is an accounting issue. While if the borrower is delinquent you don't have to send annual statements, unless the loan and borrower qualify for cancellation, I don't think it makes any difference. You can't just stop the escrow account or grab the money.
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#2170052 - 03/26/18 03:54 PM Re: Cancel escrow on Charged Off Loan tryin2comply
Compliance NABW Offline
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Joined: Oct 2015
Posts: 1,671
Is the conclusion with this question that the servicer can continue to operate an escrow account on behalf of the "borrower?" They would just need to abide by the general Escrow Account rules, meaning they still need to disburse timely, only use for property taxes, insurance, etc., but they would not have to send the annual statements?

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