Does the refund have to be by check, or can we do a direct deposit or ACH of the refund? REG X appears silent on this...if we are allowed to do an ACH, do we need customer authorizations to do this?

As you indicated, RESPA doesn't seem to indicate how the surplus is issued. There is an Q&A that indicates you can't apply the excess to the loan, but nothing about how you give it, that I am aware of.

Another scenario...can a surplus be used to pay other losses at the bank? I know the HUD Q&A indicates you can't apply the surplus to the mortgage loan, but can we use it to offset other losses? To me, we are still "refunding" the funds in this case by applying the surplus to other debts, and RESPA doesn't specify how the refund is to be accomplished.

Example: escrow account with a surplus of $150, and a checking account that is charged off for $75. Can we refund the surplus by applying $75 to the chargeoff and sending a check for the remainder?

I believe the spirit of the RESPA rule is you must provide the surplus to the borrowers since it is their money. Escrows are sensitive topics.

For example: Even if the borrower is past due on the loan, you can't apply the surplus to the loan. You can withhold the surplus until they are current, however. Why wouldn't HUD let you apply the surplus to the past due amount (which would help the borrower), I'll never understand.