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Questions

  1. What is an Escrow Account?
  2. Why do I have an Escrow Account?
  3. What is an Escrow Analysis?
  4. When is an Escrow Analysis performed on my account?
  5. What is a Reserve or Cushion Requirement?
  6. How is my Escrow payment determined?
  7. Why has my escrow payment increased (or decreased)?
  8. How can my payment be changing when I have a fixed rate loan?
  9. How can I request a new escrow analysis?
  10. Can I cancel my escrow account and pay my own taxes and/or insurance?
  11. What is the Total Annual Escrow Amount Needed?
  12. What is the Total Monthly Base Payment Amount?
  13. What is the Lowest Projected Balance?
  14. What is the Total Reserve (or Cushion) Requirement?
  15. What is a Shortage?
  16. How will my Escrow Shortage be handled?
  17. How can I pay the shortage up front and lower my monthly payment?
  18. How can I have a shortage this year when I had an overage last year?
  19. What is an Overage?
  20. How will my Escrow Overage be handled?
  21. How will an Escrow Overage of less than $50 be handled?
  22. What is the Payment Change Amount?
  23. What is the Effective Date?
  24. When an Escrow Analysis is performed on my account, how is my new payment amount calculated?
  25. What happens to my Escrow Account when my loan transferred?
  26. Why did I not earn interest on my escrow account, and can my escrow balance be refunded?
  27. How do I read my escrow statement?

Answers

  1. What is an Escrow Account?

    An escrow account is used when Nationstar Mortgage LLC disburses your tax and insurance payments on your behalf. The amount in your escrow account is based on the estimated amount necessary to pay these obligations each year. The escrow portion of your monthly loan payment goes into an account to pay for future disbursements of your property taxes and insurance premiums.  During the year, payments are made from this account as bills come due.

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  2.  

  3. Why do I have an Escrow Account?

    You may have initially had an escrow account set up at the time of the closing or an escrow account was established post closing in some instances.

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  4.  

  5. What is an Escrow Analysis?

    An Escrow Analysis helps determine how much money should be deposited into an escrow account to cover future tax and insurance obligations. An annual escrow analysis is performed to determine whether the monthly payment amount needs to be adjusted higher, lower or not at all. Adjustments would be based on payments that have already been made on your behalf, estimated future amounts and the balance in your escrow account at the time of analysis.

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  6.  

  7. When is an Escrow Analysis performed on my account?

    We are legally obligated to perform an escrow analysis by a federal law known as the Real Estate Settlement Procedures Act (RESPA). Regulations require lenders to perform an escrow analysis before the establishment of an escrow account and once every twelve months thereafter. If during the course of the year there are significant changes in any of the bill amounts, we may analyze the account more frequently.

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  8.  

  9. What is a Reserve or Cushion Requirement?

    Your loan documents may refer to a reserve, usually called a "cushion". This reserve requirement is allowed by federal and most state laws and acts as an additional safeguard to cover unanticipated disbursements or disbursements made before all of your payments have been made into your escrow account. The reserve represents a percentage of your total yearly expenses. In most states the cushion is equal to one or two months of your escrow payment. In some cases (such as escrow shortage), we may use some of the reserve amount in order to assist you in meeting tax and insurance obligations.

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  10.  

  11. How is my Escrow payment determined?

    Your taxing authority and insurance company determine the amount of your tax and insurance payments. When your loan is escrowed, we take responsibility for administering the payment of your tax and insurance bills; however, the payment liability is still your obligation. If you should receive any notices from your insurance carrier, broker or agent or the taxing authority regarding your payment, please advise us immediately.

     

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  12.  

  13. Why has my escrow payment increased (or decreased)?

    If your escrow expenses, such as taxes and insurance, increased (or decreased) in the past year, your total mortgage payment may also have increased (or decreased).

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  14.  

  15. How can my payment be changing when I have a fixed rate loan?

    A fixed rate loan means that only the principal and interest portion of your monthly payment remains constant. The escrow portion will change as the taxes and insurance premiums change.

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  16.  

  17. How can I request a new escrow analysis?

    If you feel that there is an error with your most recent escrow analysis or that an interim analysis may be necessary due to recent changes with your escrow payments, please submit a request in writing via postal mail or e-mail indicating why a new escrow analysis is necessary and include backup documentation.
    All correspondence should include:

    •    NATIONSTAR Loan Number
    •    Borrower Name
    •    Property Address
    •    Last four digits of borrower social security number

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  18.  

  19. Can I cancel my escrow account and pay my own taxes and/or insurance?

    It is not the policy of NATIONSTAR to remove an existing escrow account.

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  20.  

  21. What is the Total Annual Escrow Amount Needed?

    An escrow account is used to collect funds that will be used to pay escrowed items, such as taxes, insurance, MIP (Mortgage Insurance Program) or PMI (Private Mortgage Insurance), etc. The Total Annual Escrow Amount Needed is the sum of the escrowed items per year. For example, if your taxes are paid quarterly and the amount of your tax payment is $400.00, then the total amount to make this payment is $1,600.00 annually.

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  22.  

  23. What is the Total Monthly Base Payment Amount?

    This is your Total Annual Escrow Amount divided by 12 months. It is the amount we need to collect each month to cover the total of your escrowed items per year.

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  24.  

  25. What is the Lowest Projected Balance?

    When an analysis is performed, your escrow account is evaluated to see if there will be enough money to cover your escrowed bills. The Lowest Projected Balance is calculated by taking your beginning escrow balance, projecting twelve monthly escrow payments, and then subtracting tax and insurance payments when they are due.

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  26.  

  27. What is the Total Reserve (or Cushion) Requirement?

    Federal law and the majority of States allow for the collection of a reserve amount to maintain a reserve/cushion for unexpected tax and/or insurance disbursements from or increases to your escrow account. The Total Reserve Requirement is a percentage of your Total Annual Escrow Amount Needed.

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  28.  

  29. What is a Shortage?

    Similar to most personal checking accounts, when funds have been under collected, a shortage occurs. The amount of the shortage would be the maximum negative amount that your account would reach if an adjustment to your monthly escrow payment was not made. Your loan will undergo an annual escrow analysis and your payment will be adjusted to compensate for the increase in your taxes or insurance and to offset the shortage which has occurred in your escrow account. 

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  30.  

  31. How will my Escrow Shortage be handled?

    Escrow shortages will be calculated by spreading repayment over the projected 12 month period. You also have the option of paying off your shortage in one lump sum.

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  32.  

  33. How can I pay the shortage up front and lower my monthly payment?

    You have the option of paying your shortage in full or in part.  However, only payment of the shortage amount in full will result in an immediate lowering of your monthly mortgage payment to the lowest amount.

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  34.  

  35. How can I have a shortage this year when I had an overage last year?

    There are several reasons to consider: Significant increases in taxes or insurance, monthly escrow payments were not made as scheduled, last year’s analysis did not include all of the items covered under this analysis.

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  36.  

  37. What is an Overage?

    If there is a surplus of funds in your escrow account, this is called an overage. Since tax or insurance payment amounts can change from year to year over collection may sometimes occur.

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  38.  

  39. How will my Escrow Overage be handled?

    If after your escrow account is analyzed you have a surplus of $50 or more, it will be refunded to you, provided your loan is current. If your loan not current the additional funds will remain in your escrow account until your next scheduled escrow analysis.

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  40.  

  41. How will an Escrow Overage of less than $50 be handled?

    If your loan is current and your escrow overage is less than $50, the surplus will remain in your escrow account. If your loan is not current the additional funds will remain in your escrow account until your next scheduled escrow analysis.

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  42.  

  43. What is the Payment Change Amount?

    The analysis of your escrow account reviews the amount of Taxes, Insurance and Mortgage Insurance (PMI), if applicable, paid from your escrow account to determine if any of these items have increased or decreased since the last escrow analysis was performed.  If there was an increase or decrease, your monthly escrow payment will be adjusted.  Your Escrow Account Disclosure Statement shows your current mortgage payment and your new mortgage payment for easy comparison.

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  44.  

  45. What is the Effective Date?

    When an escrow analysis is performed, the new payment amount will begin on a specified date.  This date is the “Effective Date”.

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  46.  

  47. When an Escrow Analysis is performed on my account, how is my new payment amount calculated?

    Your new payment amount is calculated by adding the following elements:

    •    Principal & Interest - This is the amount of your total monthly payment that is required for your principal and interest per the terms of your note or your last ARM statement if your loan is an Adjustable Rate Mortgage.

    •    Required Escrow Payment - This is the Total Monthly Base Escrow Payment Amount.

    •    Shortage Payment - If there is an escrow shortage on your account at the time of analysis, the shortage amount will be incorporated into the monthly payment until the next analysis review.

    •    Reserve Requirement - This is 1/6 of your Total Reserve Requirement unless stated otherwise in your mortgage document or permitted by applicable state law.

    •    Optional Insurance - This is the portion of your payment that would go to any additional insurance policies that you may have elected to add to your monthly payment, such as Credit, Life or Disability Insurance.

    •    Rounding Amount - Federal Law allows us to round up or down to the nearest dollar amount. Any additional funds collected are deposited into your escrow account.

    •    Buy-down/HUD Assistance Amount - Some loans, when funded, are supplemented by other agencies in an effort to enable unqualified borrowers the ability to purchase homes. These funds are usually temporary and have a specific schedule of disbursements.

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  48.  

  49. What happens to my Escrow Account when my loan transferred?

    The terms and conditions of the mortgage do not change when a loan transfers from one financial institution to another. The remaining escrow balance and any escrow interest will be forwarded to the new servicer/lender.

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  50.  

  51. Why did I not earn interest on my escrow account, and can my escrow balance be refunded?

    NATIONSTAR is required to pay interest on escrow accounts only for specified states. If your statement does not reflect interest earned on your escrow account, then we are not required to pay interest on escrow in your state.  NATIONSTAR performs an escrow analysis effective with the first anniversary date of your loan and annually thereafter. You will be notified of any overage at that time. If your loan is current, overages in excess of $50.00 will be refunded to the Borrower.

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  52.  

  53. How do I read my escrow statement?

    Click Here to download our Escrow Disclosure Statement Guide.

    To view these documents, you must have Adobe® Reader®, which is a free software application. Click here to download Adobe Reader.

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  54.  

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