Question 1

What is Section 10 of RESPA?

Accepted Answer

Section 10 of RESPA (12 U.S.C. 2609) governs escrow accounts for mortgage loans. It limits: the amount a lender can require a borrower to deposit into an escrow account for property taxes and insurance. The lender can collect: 1/12 of the annual estimated taxes and insurance per month, plus a cushion of no more than 2 months’ estimated payments. The purpose: prevents lenders from requiring excessive escrow deposits that would burden borrowers.

Question 2

How does Section 10 protect Florida borrowers?

Accepted Answer

FL protections: escrow limits (the lender cannot require more than 1/12 of the annual estimated taxes and insurance per month, plus the 2-month cushion), annual escrow analysis (the lender must conduct an annual analysis of the escrow account to ensure the correct amount is being collected), escrow surplus (if the account has a surplus of $50 or more, the lender must return the excess to the borrower within 30 days of the analysis), and escrow shortage (if the account has a shortage, the lender must give the borrower the option to pay the shortage in a lump sum or spread it over the next 12 months).

Question 3

What happens if a lender violates Section 10?

Accepted Answer

Violations: if the lender collects excessive escrow deposits: the borrower can: file a complaint with the CFPB, sue for actual damages (the excess amount collected plus any additional losses), and recover attorney fees and costs. The CFPB: can impose fines and corrective actions on the lender. In practice: Section 10 violations often occur when the lender fails to conduct the annual escrow analysis or does not return surplus funds. Borrowers should review their annual escrow statement and dispute any overcharges.

Section 10 (of RESPA)

Section 10 of RESPA (Escrow Accounts)

Limits

Surplus/Shortage

Violations

Related Terms

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