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PMI premium included in escrow cushion

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  • #3511
    compliancegirl
    Participant

    Is it a violation of RESPA to include the PMI premium in the escrow cushion?
    The only guidance I can find on this is Consumer Compliance Outlook Second Quarter 2009.
    We have been including PMI premium in cushion, would we be required to refund this?

    #3513
    rcooper
    Keymaster

    Including PMI is acceptable if it will be paid out of escrow. Take a look at question 3: https://portal.hud.gov/hudportal/HUD?src=%2Fprogram_offices%2Fhousing%2Framh%2Fres%2Frespafaq#TEM

    Also see 12 CFR 1024.17(c)(1) which states “…In addition, the servicer may charge the borrower a cushion that shall be no greater than one-sixth (1/6) of the estimated total annual payments from the escrow account.”

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