1024.17 of RESPA outlines the rules institutions must follow when establishing and administering escrow accounts. Keep in mind, however, these requirements technically apply only to those escrow accounts that are “required” by the institution. RESPA states, …the term "escrow account" excludes any account that is under the borrower's total control. To say it another way, an escrow account that is voluntary for the borrower is not subject to RESPA. While you might be thinking you could save yourself a lot of headaches by simply saying all your escrow accounts are voluntary, it’s not quite that easy. While there’s no specific documentation required to distinguish between a required vs. a voluntary escrow account, you do have to be able to demonstrate that any voluntary escrow is “under the borrower’s total control”. So what does that mean?
Jerod explains more in the video.
You can access a sample voluntary escrow letter in the Free Lending Tools.
Published
2025/01/30