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RESPA & Escrow Account

Mark Cappel
UpdatedMay 10, 2024

Is a mortgage escrow account for taxes and insurance required under RESPA?

I currently have a home mortgage with Chase. When I refinanced a few years ago I agreed to include an escrow account within the mortgage. Since then, I have tried twice to change this agreement and pay my insurance company and taxes directly once yearly. Chase has told me that I can not do this unless I refinance. The representative said this situation is a part of the RESPA law. I have excellent credit, a good amount of savings, and owe approximately 60K on my home. Was the representative correct about(this)law? Thank you.

No, the Chase customer service representative (CRS) was incorrect about RESPA and escrow accounts, but his or her misinformation is irrelevant for the purposes of your question.

First, some background information about the Real Estate Settlement Procedures Act (RESPA), which took effect January 1, 2010. The U.S. Department of Housing and Urban Development (HUD) describes RESPA on its Web site thusly: "RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD."

According to the RESPA FAQs About Escrow Accounts for Consumers, an escrow account is not required under RESPA. Therefore, that portion of what the CSR told you was an incorrect statement of law.

However, the mortgagee is allowed to require an escrow account as a condition of you, the mortgagor, doing business with it. That is allowed under RESPA. Therefore, the CSR telling you that you need to refinance to lift the escrow account requirement is probably true, if that is a condition of your mortgage.

You may want to consider refinancing. See the resource Refinance Rates to learn more about refinancing your mortgage.

I hope this information helps you Find. Learn & Save.



The Latest on Mortgage Rates

Mortgage rate fluctuations should come as no surprise. If you are buying a home or refinancing your existing mortgage, it is important to stay informed about the current mortgage rates.

Mortgage rates April 10, 2024
According to Freddie Mac, the 30-year mortgage rate for the week of April 10, 2024 stands at 6.88%. This 6 basis points increase from the previous week's rate.
Additionally, Freddie Mac reports that the 15-year mortgage rate for April 10, 2024 is 6.16%, indicating a 10 basis points increase from previous week’s rates.
Note: A basis point is equal to one-hundredth of one percent (0.01%). In numerical terms, if the mortgage rate changes by 20 basis points, it means the rate has changed by 0.20%.

What does the mortgage rate mean for you?
Mortgage rates are one of the key factors that determine your monthly payment. Here are avergage interest rates (APR) for April 14, 2024 based on Zillow date for borrowers with a high credit score (680-740) in the United States:

  • 30-year conventional loan is 7.09%
  • 15-year conventional loan is 6.29%
    Using the rates mentioned above, the monthly payment for a $279,082 30-year-year mortgage would be $1,874. A 15-year mortgage would require a monthly payment of around $2,399.

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