| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
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| #12363 | Closed | public | Multifamily | _General Support |
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What are the mortgagor’s obligations as it relates to escrow accounts held by a HUD lender? If an escrow account is underfunded at year end (for example, there won’t be enough cash in the escrow to fund a payment that’s due on their insurance policy in February), but the mortgagor has made all deposits requested by the lender, is there any potential compliance issue for the mortgagor? Or is it the lender that is at fault by not properly adjusting the escrow requirements? And if the mortgagor has made all deposits required by the lender, but the escrow balance is obviously at a shortage at year-end, would the shortage be considered “Deficient Tax Insurance or MIP Escrow Deposits” on line S1300-090 in the surplus cash calculation, or is that line reserved for deposits that have been required by the lender but not paid as of 12/31 only? Thank you |
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Chad, this is an interesting dilemma. It comes up somewhere every year. IN general, CPAs tend to place an underfunded escrow account squarely on the shoulders of the lender. We do not see too many findings (most likely none) for this issue. Usually the escrow holder/bank simply funds the difference and the adjusts the required payment amount. The risks are low if all payments are made.
Now there is no guidance given on the specifics of deficit escrows, per se. Once again anecdotal evidence suggests that most CPAs do not force those adjustments to surplus cash if all required payments are made. I thnk almost all deficiencies are the result of missed mortgage payments.
Les Sparks AHACPA (801) 547-0809
From: AHACPA Support <support@ahacpa.org> |