Escrow Analysis
RESPA Requirements, Cushions, Aggregate Analysis

 

Escrow Analysis Training Manual        
 UPDATED OCT 2009 (Includes Higher Priced Mortgages Rule requiring escrow accounts  new HUD1, and new GFE)

Escrow Analysis Training..by Linda Chandler
When we started working in the mortgage servicing business several years ago, we would have been delighted if someone had given us access to an Escrow Analysis Training Manual.  We learned  what we could from others and figured out some things on our own.

Back then we used the single item pre-accrual method of analyzing.  With this method, each escrowed
item was collected  separately based on its due date and many believed the industry over collected for escrow items. 

Although the Real Estate Settlement Procedures Act was enacted in 1974, Section 10 relating to
escrow accounts, was not interpreted until HUD issued the Final Rule effective October 1, 1995. 
The Final Rule required major changes in the way accounts were analyzed.  It required training or
re-training on escrow analysis, system changes, a review of state laws and a review of the mortgage documents to see if cushions were allowed. Indeed there were drastic changes to the established
method of conducting an escrow analysis. .

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Compliance
Mortgage servicers managed to work all this out and bring their company into compliance.  Training was provided for  employees, systems were changed, overages were refunded as needed, and eventually everyone became accustomed to aggregate analysis.

Training
Although the staff became accustomed to aggregate analysis, new employees still had to start at the beginning and learn about escrow accounts - why do we maintain an escrow account, what is included
in an escrow account, and the requirements of HUD's Final Rule.  Terms such as cushions, shortages, deficiencies, overages, fall to zero, aggregate analysis, initial disclosure statement, and many more are complicated terms for new employees.  Our Escrow Analysis Training Guide was written with that
thought in mind. Please visit our About Us page to read about the authors.

When you hire new employees for Customer Service and the Escrow Department, do you have time to
provide them detailed training?  Even if you do, do you have a training manual employees can keep at
their desk as reference material?

                          

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