Annual Escrow Account Disclosure Statement

The low point equals the lowest monthly escrow balance during the 12-month projection. An escrow balance is projected for a 12-month period, assuming that A+FCU receives scheduled payments and makes scheduled disbursements (pay property taxes, insurance premiums, etc.).

The starting balance needed to ensure the account has enough funds to cover all property taxes, insurance premiums, etc.

• A surplus is the portion of the projected escrow balance that is greater than the cushion amount.
• A shortage is the amount by which the escrow balance falls short of the cushion amount.
• A deficiency is the amount by which the balance goes below zero. When the account has a deficiency, it will also have a shortage.

A surplus in the amount of $50 or more is refunded in the form of a check sent via mail, while surplus amounts under $50 are returned by lowering the monthly escrow payment due.

Example: $48 surplus divided by 12 months = $4 decrease to the monthly escrow portion

Number of months the surplus, shortage, or deficiency will be divided by. Shortages and deficiencies are divided by 12 months and added to the monthly payment.

Example: $1,200 shortage divided by 12 months = $100 added to the monthly escrow portion

Please refer to the above dropdown to go over surplus amounts.

Monthly payment amount reduced or added to the monthly escrow based on the surplus, shortage, or deficiency divided over 12 months.

Example: $1,200 shortage divided by 12 months = $100 added to the monthly escrow portion

Total estimated amount of any tax, insurance, and any other escrowed items anticipated to be dispersed from the escrow account.

Number of months the escrow disbursement(s) will be divided by. Disbursements are divided by 12 months and added to the monthly payment.

Example: $5,100 for tax, insurance, etc. divided by 12 months = $425 per month

Monthly payment amount of the total estimated escrow disbursements.

Example: $5,100 for tax, insurance, etc. divided by 12 months = $425 per month

Every time you make a mortgage payment a set amount of your payment (escrow portion) is deposited into your Escrow Account. We maintain this account on your behalf to ensure timely payment of your real estate taxes and homeowners insurance. Any applicable flood insurance and/or mortgage insurance premiums are also paid from this account. In addition to funds to cover these escrow bills, your Escrow Account also holds funds to cover your “required Escrow Account minimum balance.”

At least once a year, we review your Escrow Account to determine if the escrow portion of your monthly payment is sufficient to cover the annual requirements of your Escrow Account. We are required under the Real Estate Settlement Procedures Act (RESPA) to disclose to you in an Escrow Account Disclosure Statement the results of this review and its effect on your monthly mortgage payment. Occasionally, we may provide you with an interim statement, if needed.

Federal law allows us to maintain up to a two month minimum balance or cushion of funds in your Escrow Account. It serves as a safeguard in the event of an increase in your escrow bills. No more than one sixth of your total projected payments (or two months of escrows) for taxes and insurance constitute this cushion unless your mortgage contract or state law specifies a lower amount.

Here are some potential explanations for increases and decreases to the escrow portion of your monthly payment.

Hazard Insurance: Insurance premium can change due to changes to your coverage or your rate. Please contact your insurance company or your local insurance agent with questions about changes to your premium.

Real Estate Taxes: Real Estate Taxes can change as a result of your property reassessment, a change in your tax rate, or a special assessment. Please contact your local tax office for any questions regarding changes to your real estate taxes.

New Construction: Typically, the first tax bill for a new construction only covers the lot/land. A subsequent bill is generally higher and is based on the fully assessed value which includes the land and the house.

Initial Escrow Deposit: Prior to closing, the escrow portion of the monthly mortgage payment is calculated based on the information available. Available information is usually an insurance quote or premium amount for existing coverage, and tax bill information from the previous year. This amount may turn out to be more or less than the actual bills, resulting in a change to your monthly mortgage payment.

This results in a surplus. In case of a surplus, you typically receive a refund check if the surplus amount is $50 or more and the escrow portion of your monthly mortgage payment is adjusted according to your new escrow bills. Details of these changes are sent to you in your Escrow Account Disclosure Statement. Your loan must be current when the escrow analysis is performed to receive a credit or refund of any surplus funds.

This results in a shortage. We spread your shortage over the next 12 months in addition to adjusting the escrow portion of your monthly payment amount, or you can choose to pay the shortage in full by the date listed in the Escrow Analysis Disclosure Statement. Please include the coupon from the statement when sending in the check.

Yes, it can. Even if you pay the shortage resulting from last year’s escrow payments, an increase in your projected tax bill or hazard premiums for the coming year could result in your payment increasing.