Escrow Statement

What is an escrow analysis?

We review your escrow account at least annually and send you a detailed report of your activity and any changes to your expenses and/or monthly payment. Your Escrow Account Disclosure Statement details:

• If applicable, a summary of upcoming changes to your monthly payment.
• Comparison of actual expenses to what was expected.
• Actual escrow activity and balance throughout the past 12 months.
• Expected escrow activity in the upcoming 12 months and how a shortage or surplus was calculated.

How is my monthly payment determined?

All escrow accounts have a minimum required balance, which is calculated based on your expected tax and/or insurance expenses and includes extra money (known as a cushion) in case your expenses are higher than expected. Depending on the terms of your mortgage, your escrow account can be set up for property taxes, homeowner's/hazard insurance, flood insurance, and/or mortgage insurance.

Initially, when your loan closed, your monthly escrow payment was calculated based on your expenses expected at that time. Since tax and insurance expenses can change from year to year, we review your account at least annually to help ensure your escrow account has enough money to cover your upcoming bills. Typically, the expected amount of your upcoming bills is based on your expenses in the prior year.  

In addition, if your most recent escrow analysis found a shortage that was spread across your upcoming monthly payments, this is also included in your escrow payment.

Why is there a minimum balance requirement?

Your minimum required balance, also known as a cushion, helps ensure your escrow account has enough money to pay for unexpected increases in your tax and/or insurance expenses. The minimum required balance is required by the Real Estate Settlement Procedures Act (RESPA), your mortgage documents, or state law. When you pay off your loan, funds held in your escrow account as a cushion will be refunded.

How is the low balance estimated?

The lowest balance expected in the upcoming year, also known as the low point, is determined based on your starting balance, the amount of your monthly escrow payments, and your expected tax and/or insurance expenses in the upcoming year.

Why did my payment change?

If your taxes and/or insurance bills change year-over-year, you may need to adjust the amount you are paying into your escrow account, too. Reasons may include:

• Insurance: Changes to type, extent, due date, rate, insurance policy, or carrier.
• Real estate taxes: Property value, tax rate, or due date changed.
• Your property value changed: If you have built a new home or renovated it, your property value will likely increase. Any substantial improvement to your property will likely increase your property taxes. 
• Initial escrow deposit: Escrow costs may be estimated at loan closing if the information is unavailable. If the amount collected to set up your escrow account was more or less than your actual costs, your payment will be adjusted accordingly.
• Shortage: Your balance is expected to fall below your Minimum Required Balance. A shortage repayment is automatically divided across your payments for the upcoming 12 months, increasing your monthly payment. See our Escrow Shortage FAQs for more information.

Who do I contact with questions about my escrow expenses?

• Taxes: Your local tax assessor’s office.
• Insurance premiums: Your insurance company.
• Your escrow payments and disbursements: Reach out to us. We'll be happy to help!