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Understanding My Escrow Account

     

 

What is escrow analysis and how often is it performed?

As required by RESPA, Carrington Mortgage Services, LLC (CMS) completes an escrow analysis each year to ensure your escrow account is funded correctly, determine any surplus or shortage, and adjust your monthly payment accordingly, to cover all of the bills that are paid through your escrow account, including property taxes, homeowners insurance, mortgage insurance (if required), and flood insurance (if required).

The analysis outlines the activity on your escrow account for the past year and the anticipated activity for the coming year, including changes in your property tax or homeowners insurance.

CMS maintains a cushion equal to two months' estimated taxes and insurance (unless limited by your loan documents or state law). This measure helps to avoid a negative balance in the event of changing tax and insurance amounts.

How am I notified when my escrow account is reanalyzed?

You will receive an updated escrow statement. To view a copy of your escrow statement on our website:

If you have opted into paperless statements, you will receive a notification when the document is available online. Depending on your preferences, you may also receive the statement your escrow statement in the mail.

What is an escrow cushion?

An escrow cushion helps to avoid a negative balance in the event of changing tax and insurance amounts. The two common reasons for this occurring are:

  • Increases in your property taxes
  • Increases in homeowners insurance

The allowable cushion is equal to two monthly escrow deposits unless otherwise required by state law. If your escrow balance falls below the allowable cushion, it is considered a shortage.

In this case, the portion of your monthly payment that is allocated towards your escrow account will likely increase in order to reach the required cushion.

Where can I find information about my escrow account?

For more information on your escrow account, including your current balance, current payment, and recent disbursements:

How do I add or cancel an escrow account?

If you have an FHA, USDA or VA loan, we are unable to remove the escrow account from your payment. The escrow account is a requirement of your loan and is designed to reduce the burden of larger annual payments due. 

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Tags: Escrow, Welcome to CMS

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