Understanding Your Escrow Account

An escrow account is an account held by Mortgage Servicing Solutions into which the homeowner deposits monthly pre-determined payments of the real estate tax, insurance and mortgage insurance. Each year, in accordance with Federal Law, Mortgage Servicing Solutions performs an analysis of your escrow account to determine the amount to be collected for future deposits. An escrow account is an easy way to manage property taxes and insurance premiums for your home. When we open an escrow account for your mortgage, we use it to make payments on your behalf for real estate taxes and premiums for the insurance required to protect the property, such as homeowners’ insurance. To make those payments, we collect escrow funds as part of your monthly mortgage payment.

We apply a portion of your monthly mortgage payment to your property taxes and homeowners’ insurance and, if applicable, mortgage insurance. This portion is placed into an escrow account until the tax and insurance payments are due.

To determine your escrow payments, we estimate the amount we will have to pay over the next 12 months for your real estate tax and homeowners’ insurance bills. We base this estimate on information from your loan closing documents, your taxing authority and insurance company, or your previous tax and insurance bills. We then divide the estimated amount by 12 (months) and add the result to your monthly payment.

It may if your taxes and insurance premiums change. On an annual basis, we conduct an escrow analysis where we compare the initial escrow amount estimated by the lender to the actual amount paid in taxes to your city or town and premiums to your insurance company. If there is a difference, we will adjust your monthly escrow payment.

If your monthly mortgage payment amount changes due to an escrow adjustment, the new monthly mortgage payment amount will go into effect with the payment after the analysis has been completed. Once a year, we will mail you a statement summarizing this analysis.

If you have paid more into your escrow account than we had to pay out of it, you will have an escrow overage. If your overage amount is more than two months’ worth of escrow payments, we will send you a refund check with the overage amount. Additionally, your monthly escrow payment amount will be adjusted to reflect the actual amount paid.

If you have paid less into your escrow account than we had to pay out of it, you will have an escrow shortage. We will adjust your monthly escrow payment amount to reflect the actual amount paid. If your account is short, we will let you spread the additional payments over the next 12 months. We conduct an escrow analysis annually to make sure we’re collecting the right amount to cover your projected taxes and insurance premiums. If these payments increase or decrease, we’ll recalculate your escrow payment. This is separate from the calculation to determine whether you have a shortage or overage, so your payment amount could increase even if you pay your shortage in full.

Mortgage Servicing Solutions does not allow the deletion of customer escrow accounts.

Any changes to your escrow payment amount will appear on the escrow account disclosure statement you receive each time we review your account. You can also find out more by logging into your mortgage account via our Mortgage Servicing Solutions Digital Servicing.