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 tsalih
Joined: 13 Oct 2010
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jameshogg
Joined: 20 Dec 2005
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Location: Nevada
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Posted: Sun Oct 17, 2010 4:10 am Post subject:
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Not sure if you’re talking about initial or annual escrow analysis but concept is the same and any LO can easily walk you through the figures. First, you’ve got to forget what you saw on the GFE – not done that way. Not that the government is myopic, it’s just that the populace is easier to control if you confuse same.
Project the running escrow balance over the next twelve months by adding one-twelfth of annual escrow bills (taxes, insurance and MI) and deducting the individual escrow payments (taxes, insurance, and MI) payments in the appropriate month due. When establishing the initial escrow balance from closing, take the absolute value of the lowest (highest negative since there is no current escrow) balance and add one-sixth of total anticipated escrow bills to arrive at required beginning balance. The same procedure applies to the escrow analysis typically done on an annual basis during the life of your mortgage to determine escrow overage or shortage but you will start with the actual or projected escrow balance on the analysis month. The one-sixth add-on is technically optional but permitted by law and almost universally used.
If my summary is not crystal clear, Google “aggregate escrow analysis”. By the way, the “GFE method”, assuming LO didn’t count incorrectly, will come up with an reasonably close approximation – at least “close enough for government work.” |
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LD
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smithsussane
Joined: 18 Sep 2008
Posts: 10439
Location: Alaska
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