Published on February 24, 2022
Written by Kathleen Nystrom
The initial escrow statement, or IES, may not be as “glamorous” as the note and the mortgage, but it is still an extremely important document. The IES is intended to calculate the escrow payment and ensure there are no surprise payment changes for the borrower during the first year of their loan. If not completed correctly, the borrower’s payments could increase, possibly before they even make their first payment. That obviously leads to dissatisfaction, a result we all want to avoid.
The projection must include all escrow items. If an item was paid at closing, confirm the escrow payment includes 1/12 of that item.
If there is a negative balance anywhere in your projection, the IES is incorrect.
The cushion amount must be established at the lowest point of your projection balance. The cushion amount cannot include PMI / MIP.
Verify the amounts for taxes and insurance as well as their frequency. Timing of disbursements affects the low point of the projection.
Overall, initial escrow statement is one of those things that tends to be taken for granted, but it can cause unnecessary borrower dissatisfaction when not completed properly. Taking a few extra minutes to check and double check the IES information can save everyone a headache down the road.
Send an email to email@example.com and your question might be answered in a future newsletter!
Need a partner for mortgage loan servicing? Consider Servion. Learn more about our servicing capabilities.