Fair handling of your escrow account
12 C.F.R. § 1024.17(c)(1)
In plain words
If your servicer collects money for taxes and insurance (escrow), it must pay those bills on time as long as you are not more than 30 days behind. It must review the account every year and send you a statement. It cannot keep more than a small cushion (one-sixth of a year's payments), and it must refund a surplus of $50 or more within 30 days of the review. When you pay off the loan, it must return what is left within 20 business days.
Who is protected
Borrowers with an escrow account on a federally related mortgage loan.
When it applies
- Only if your loan has an escrow account.
What you can do
Check your annual escrow statement
Compare the tax and insurance amounts to your real bills. Ask for the account history with a request for information, or dispute a wrong charge or late tax payment with a notice of error.
Open the toolGet tax-sale help if escrow failed to pay your taxes
If a tax bill went unpaid from escrow, contact the tax office right away and dispute the error with your servicer.
Open the tool
Honest limits
- If you are more than 30 days behind, the servicer's duty to advance money for escrow bills can change, and a shortage can raise your monthly payment.
- This is general legal information, not legal advice, and it does not promise any result. A HUD-approved housing counselor or a lawyer can look at your facts.
The law
- Federal regulationRegulation X — escrow cushion limit
12 C.F.R. § 1024.17(c)(1)
Exact part: (c)(1)
What it says: The servicer may keep a cushion of no more than one-sixth of the estimated yearly escrow payments.
Read the official texthttps://www.ecfr.gov/current/title-12/part-1024/section-1024.17#p-1024.17(c)(1) - Federal regulationRegulation X — annual analysis, surpluses and shortages
12 C.F.R. § 1024.17(f)
Exact part: (f)
What it says: The servicer must analyze the account and refund a surplus of $50 or more within 30 days of the analysis.
Read the official texthttps://www.ecfr.gov/current/title-12/part-1024/section-1024.17#p-1024.17(f) - Federal regulationRegulation X — timely escrow payments
12 C.F.R. § 1024.17(k)
Exact part: (k)
What it says: The servicer must pay taxes and insurance on time as long as the borrower's payment is not more than 30 days overdue.
Read the official texthttps://www.ecfr.gov/current/title-12/part-1024/section-1024.17#p-1024.17(k) - Federal regulationRegulation X — timely escrow disbursements
12 C.F.R. § 1024.34(a)
Exact part: (a)
What it says: The servicer must pay escrow bills on or before the deadline to avoid a penalty.
Read the official texthttps://www.ecfr.gov/current/title-12/part-1024/section-1024.34#p-1024.34(a) - Federal regulationRegulation X — refund at payoff
12 C.F.R. § 1024.34(b)
Exact part: (b)
What it says: Within 20 business days after payoff, the servicer must return the remaining escrow balance.
Read the official texthttps://www.ecfr.gov/current/title-12/part-1024/section-1024.34#p-1024.34(b) - Federal lawRESPA — limits on escrow deposits
12 U.S.C. § 2609
What it says: RESPA limits how much a lender may require a borrower to deposit into escrow.
Read the official texthttps://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2609&num=0&edition=prelim
Court cases
- Homeowner wonSame topicTyler v. Hennepin County
Tyler v. Hennepin County, 598 U.S. 631 (2023)
a government that sells a home for unpaid taxes and keeps the value beyond the tax debt takes property without just compensation
- Homeowner wonSame topicHall v. Meisner
Hall v. Meisner, 51 F.4th 185 (6th Cir. 2022)
a homeowner's equity in property taken for a smaller tax debt is protected property, and taking it without compensation states a federal takings claim
- Homeowner wonSame topicRenfroe v. Nationstar Mortgage, LLC
Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241 (11th Cir. 2016)
a servicer that answers a borrower's written request without a reasonable investigation may be liable under RESPA when the borrower alleges resulting damages
- Homeowner wonSame topicJesinoski v. Countrywide Home Loans, Inc.
Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259 (2015)
a borrower exercises the Truth in Lending right to rescind by notifying the lender in writing within three years, without needing to sue within that period
- Homeowner wonSame topicMarais v. Chase Home Finance LLC
Marais v. Chase Home Fin. LLC, 736 F.3d 711 (6th Cir. 2013)
a borrower who alleges actual damages, such as added interest, caused by a servicer's deficient response to a qualified written request states a RESPA claim
- Homeowner wonSame topicJones v. Flowers
Jones v. Flowers, 547 U.S. 220 (2006)
when mailed notice of a tax sale is returned undelivered, the government must take additional reasonable steps to notify the owner before selling the property
Related rights
Make your servicer fix mistakes (notice of error)
12 C.F.R. § 1024.35(a)
If your mortgage servicer made a mistake — like not crediting a payment, charging a wrong fee, or giving a wrong payoff amount — you can send a written "notice of error." The servicer must confirm it got your letter within 5 business days. It then has to fix the error or explain in writing, after a reasonable investigation, why it thinks there was no error, usually within 30 business days.
Read this rightGet information from your servicer (request for information)
12 C.F.R. § 1024.36(a)
You can ask your servicer in writing for information about your loan — for example your payment history, who owns your loan, or how your escrow was figured. The servicer must confirm it got your request within 5 business days and answer within 30 business days. If you ask who owns your loan, it must tell you within 10 business days.
Read this rightProtection from surprise "force-placed" insurance charges
12 C.F.R. § 1024.37(b)
If your servicer thinks your homeowner's insurance lapsed, it cannot just buy expensive insurance and charge you. It must send you a first notice at least 45 days before charging, and a reminder at least 15 days before charging. If you show you had insurance, it must cancel the forced policy and refund the overlap within 15 days.
Read this rightThe right to real notice before the government takes or sells your home
U.S. Const. amend. XIV, § 1Due Process Clause
Before a state or county sells your property — for example at a tax sale, or through a court foreclosure — the Constitution requires notice that is reasonably likely to actually reach you. If the government knows your address, publishing a notice in the newspaper is not enough. If a mailed notice comes back unclaimed, the government must take extra reasonable steps to reach you, if it practicably can.
Read this rightThe government cannot keep your home equity beyond the tax debt
U.S. Const. amend. VTakings Clause
If your home is taken or sold to pay property taxes, the government may collect what you owe, but it may not keep the extra value. Keeping the surplus is a "taking" of your property without just compensation, which the Fifth Amendment forbids (Tyler v. Hennepin County, 2023). You may be able to claim the surplus, but you usually must follow your state's claim process and deadlines.
Read this rightNo discrimination in housing or home loans (Fair Housing Act)
42 U.S.C. § 3604(a)–(b)
It is illegal to discriminate in selling, renting, or financing a home because of race, color, religion, sex, disability, familial status (having children), or national origin. This covers mortgage lenders and servicers too — for example, in who gets offered a loan modification and on what terms. You can file a complaint with HUD within 1 year or go to court within 2 years.
Read this right