What You Need to Know About Your Annual Escrow Account Disclosure Statement
What is Escrow Analysis
Escrow analysis is an annual review of your escrow account to ensure sufficient funds are available to cover property taxes and insurance premiums, which is a requirement of the Real Estate Settlement Procedures Act. If the amount due exceeds the amount in the account, ASB will still make the payment and will adjust your escrow payment during the next annual review.
What Information is Included in an Escrow Analysis Statement
The escrow analysis is divided into two sections. One section is the History section and the other is the Projection section.
- HISTORY: Shows a history of escrow payments and disbursements that occurred after the last escrow analysis was performed (November last year to October this year).
- PROJECTION: Shows the target balances, projected monthly escrow payment for the next period (November this year to October next year; also referred to as projection period), payments needed to maintain the account, and whether the escrow account has a shortage, overage, or account deficiency.
Common Questions:
PAYMENTS:
Beginning with the November 1st payment.
The monthly base escrow payment is determined by dividing the total annual escrow (Real Property Taxes, hazard/hurricane/flood insurance, private mortgage insurance, etc.) by twelve.
$7,200 divided by 12 = $600.00 (monthly base escrow payment)
The total monthly escrow payment is calculated using the low point in the running balance and the required cushion.
Example:
| Annual Real Property Taxes | $2,600 |
| Annual Homeowner's Insurance | $3,000 |
| Annual Private Mortgage Insurance | $1,600 |
| Total | $7,200 |
Changes to escrow amounts are due to one or more of the following factors:
- Insurance premium* increased/decreased from previous year.
- Real property tax* payment increased/decreased from previous year.
*You should contact your insurance agent or county tax office with questions.
A fixed rate means the principal and interest payment on your loan will never change. However, your monthly mortgage payment also includes an escrow payment (for example, real estate taxes and insurance premiums), which can change periodically. A change in that cost will affect the escrow portion of your total monthly payment, thereby increasing your total monthly mortgage payment.
We do not process requests to keep payments the same. The mortgage payment may fluctuate annually. See above section, “Why did my mortgage payment change?”
If your total monthly payment is increasing, please read this important information: Increases in your monthly escrow account payments are due to increases in property taxes and/or homeowners' insurance. If you have questions about an increase in your property taxes or homeowners' insurance premiums, please contact your county tax office or insurance agent.
Automatic payments set up with an American Savings Bank account will automatically update with the new payment amount effective November 1st. If you set up automatic payments from a third-party financial institution, please update your payment amount with them.
If you have 'additional principal' set up, you should be aware that the monthly payment will go up in addition to whatever the principal payment is, so be sure to make updates if you expect a specific total amount.
SHORTAGES:
It is very common for mortgage companies and lenders to pay escrow costs when they are due even though sufficient funds are not available in the escrow account. We paid more for your insurance and/or taxes than anticipated this year and need to replenish the funds this upcoming year.
The escrow shortage is the difference in your actual escrow balance and the required escrow balance. The shortage amount is divided by twelve and added to the base escrow payment, also known as the escrow shortage spread.
We do not process shortage payments. Any amount owed due to a shortage has been incorporated into your payments over 12 months beginning November 1st.
Monitor your property taxes and insurance premiums to check if there will be an increase. If there will be an increase, you could make additional payments to your escrow account at any time through the year. This will ensure that you have enough funds to cover the increase when your loan is reanalyzed next year. If you overpay more than $50.00, a refund will be sent to you in September.
We may have some options available. Please contact Consumer Loan Support Services for further assistance at LoEscrow@asbhawaii.com.
OVERAGES:
If you have an overage (also called a surplus) of $50 or more in your escrow account after your annual escrow analysis, we will mail a refund check to you by the last business day in September. Any amount less than $50 is retained in the escrow account, provided the loan is current. The escrow surplus amount is the difference between the lowest balance point in the escrow account and the base escrow payment.
Overage checks are mailed separately from the Annual Escrow Analysis Disclosure Statement. All checks are dated the last business day in August and will be mailed on or before the last business day in September.
If there is a bad address mail code prior to the last business day in August, the check will not be mailed and will be retained for 60 days. Contact the Customer Banking Center to arrange the mailing address is updated and the check will be mailed out.
