Use Escrow for Funds if Loan is 30 Days Delinquent

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Question:

If a loan is more than 30 days delinquent, can we withdraw funds from their escrow account to make their payment? Are we also obligated to pay their property taxes if there are no escrow funds available to do so? Also, please let me know where I can find the answer in the regs. I've searched RESPA with no luck so I'd like to know how to be better at researching.

Answer:

You will need to consult your loan and security agreement along with your attorney but most likely you cannot "dip" into the escrow account to pay past due payments.

If the account is more than 30 days past due the timely payment escrow rules will not apply. See Section 1024.17(k).

First published on BankersOnline.com 7/2/12