Escrow cancellation notice timing

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Question:

If a consumer is only escrowing for flood insurance and they are no longer required to escrow due to the detached structure exemption, is the bank required to send the escrow closing notice (30 day requirement)?

Answer:

In this particular case, we do not believe the 30-day notice is required, since closing the escrow account is due to a borrower-requested change. While the bank may inform the borrower they are no longer required to escrow for flood insurance, the borrower is the one who ultimately makes the decision to keep or close the escrow account. Since the borrower requests the cancellation, the escrow cancellation notice should be provided so it is received at least 3 business days (precise) prior to closure of the escrow account.
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