CEFCU Escrow

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Escrow

An Escrow account is a convenient way for you to make sure payments, like your real estate taxes, are made on time.

Overview

Escrow accounts protect the lender and borrower by ensuring there is always enough money to pay bills when they are due so homeowners avoid the risk of lapsed insurance coverage or delinquent taxes.

Payments from Escrow

  • Real estate taxes
  • Homeowners' insurance
  • Flood insurance
  • Catastrophe insurance

Each year, CEFCU reviews deposits to and payments from your Escrow account and sends an Escrow Account Disclosure Statement.

For more information on Escrow accounts see the Escrow FAQs, email CEFCU, call 1.800.542.3328 ext. 33424, or visit a Member Center.

Buying a Home?

These resources can help when you're buying a home. Plus, ask about homeowner's insurance through CEFCU Financial Services®, Inc. (CFS).

Frequently Asked Questions

What is an Escrow account?

Set up at your Home Loan closing, this special account allows CEFCU to make the following payments:

  • Real estate taxes
  • Homeowners' (fire) insurance
  • Flood insurance
  • Catastrophe (wind, earthquake, sinkhole) insurance
  • Homeowner/condo association fees

How does an Escrow account help me?

An Escrow account is a convenient way to make sure payments, like your real estate taxes, are made on time. Escrow accounts also may be required depending on your Home Loan terms.

How are monthly Escrow payments determined?

Escrow payments are based on how much is paid from your Escrow account the previous year and includes current real estate taxes and insurance premiums.

How do I know what I have in my Escrow account?

You can see payments to and from your Escrow account on your CEFCU eStatement or paper statement or by viewing your account through CEFCU On-Line®.

What is an Escrow analysis?

An Escrow analysis is an annual review of deposits to and payments made from your Escrow account. It allows us to see if there is a shortage or overage in the account. After the analysis, we send you an Annual Escrow Account Disclosure Statement.

What is an Escrow Account Disclosure Statement?

This is a statement we mail to you annually. The Escrow Account Disclosure Statement includes:

  • Anticipated and actual payments to and from your Escrow account.
  • Projected Escrow payments for the next year.
  • Your Escrow account ending balance for the year.
  • Your monthly Home Loan payment for the coming year.

See the Escrow Document Analysis for more details on the statement you receive.

I just received an Escrow Account Disclosure Statement in the mail and I have questions about it. Who should I contact?

See the Escrow Document Analysis or contact CEFCU for more details on what is included in the statement and how your Home Loan payment was determined.

What is the lowest projected balance point?

The lowest projected balance point is equal to the lowest monthly balance in your Escrow account during a 12–month period.

Why is my monthly Escrow payment amount increasing?

Monthly Escrow payments increase or decrease based on changes to your taxes and/or insurance premiums. CEFCU is notified of changes by your taxing authority and insurance company/agent. If you have questions about a change in your property taxes or insurance premiums, contact your taxing authority or insurance company/agent.

What is the lowest amount I can have in my Escrow account?

The minimum amount is based on federal law, which allows lenders the option to require up to two months of the total estimated payments made from your Escrow account. Any excess can help cover increases in taxes and/or insurance.

Is it possible to pay my entire Escrow account shortage in full?

Yes, please contact CEFCU if you would like to pay the full amount of an Escrow account shortage.

If I pay my Escrow shortage in full, will my Home Loan payment remain the same?

Paying your shortage in full may help minimize a payment increase, but it does not guarantee your payment will not change. Any new payment will be based on tax and insurance costs for the coming year.

What options do I have to pay a large Escrow shortage?

You may pay the shortage in full or leave it to be paid throughout the 12 months as part of your monthly payment. Please contact CEFCU if you need to discuss other payments or options.

Why was money deposited back into my account?

If there is an overage of more than $50, federal law requires CEFCU to return those funds to you. An overage can be a result of your taxes and/or insurance premiums being less than expected. The Escrow Account Disclosure Statement you receive in the mail will show how the overage was calculated.

Is it possible for me to pay my own taxes and insurance?

An Escrow account is set up at your loan closing and typically continues for the term of the loan. It is a convenient way to make sure payments, like your real estate taxes, are made on time.

With certain types of home loans, or if you have Private Mortgage Insurance (PMI) on your CEFCU loan, you are required to have an Escrow account. If an Escrow account is not required, you may be able to close it and pay your taxes and insurance on your own.

What happens if my Escrow account is more than it should be?

If you have an overage in your Escrow account, it will be deposited in your CEFCU Savings account on the date given in your annual Escrow Account Disclosure Statement.

Why is my monthly payment increasing when I just received money back for an overage in my Escrow account?

Your Escrow payments for the coming year are based on how much your Escrow disbursements were the previous year. If there is an overage of more than $50, federal law requires us to return those funds to you. However, if your taxes or insurance rise, your monthly payment will increase to make sure those expenses are covered.

Why is there a two-month cushion on escrows?

U.S. Department of Housing and Urban Development has very specific rules concerning Escrow accounts. A two-month cushion is granted because:

  • Escrow rules require month-end accounting, so there may be an escrow payment on the first of the month, but the payment from the borrower may not be received until the end of the month. Because of this, the financial institution may encounter a deficiency without a one-month cushion.
  • Escrows are often based on estimates. Because actual payments may increase, a cushion is allowed for inaccuracies.

What are the requirements for Mandatory Escrows?

CEFCU requires borrowers to Escrow their real estate taxes and homeowner’s insurance. Also, if applicable, we require Escrow for flood insurance and/or Homeowner’s Association Dues for FICO scores of 649 or less or if the debt-to-income ratio is 45 percent or higher. Mandatory Escrows for either of these reasons are a Life of Loan requirement. CEFCU will not allow the Escrow account to be canceled until the loan is paid off, regardless of the loan-to-value.

Can I stop my Escrow ahead of the closing of refinancing so I can have the funds dispersed and applied to the new mortgage?

If the Escrow is not required, you can close the Escrow at any time. A Drop Escrow Request needs to be completed.

If I refinance an existing CEFCU mortgage with an Escrow account, can I roll my existing Escrow balance to the new mortgage?

Unfortunately, you cannot roll your current CEFCU Escrow into the new mortgage. The funds in the Escrow on the current mortgage will be held until the current mortgage is paid off, unless the Escrows are not required on the current mortgage. The payoff of an existing mortgage from a CEFCU refinance is a minimum of three days after the closing of the new mortgage to allow for the rescission period. At the time the new mortgage closes, the new Escrow account is funded based on the disbursement amounts and when those payments are anticipated to be paid. The new Escrow account also collects additional funds because you will likely not make a mortgage payment the month following your mortgage closing.

If I want to start Escrows on a refinance/modification that didn’t previously have them, when do the Escrows start and how can I fill the Escrows?

The refinance is a new loan, and the Escrows will be set up when the new loan closes. The Escrow balance can be funded from the loan – if you have sufficient equity available – or from your own funds.

If I want to start an Escrow account on my mortgage, when does the Escrow payment start, and how can I fund the Escrow?

An Escrow account can be set up at any time. We run an Escrow projection around the middle of each month. You will need to complete the Request to Open Escrow and provide the documents requested in that form.

If my taxes are decreasing, what docs do I need to readjust the Escrows or is it automatic? When does it take effect?

You will need to provide a written document – new assessment – from the county where the home is located. The Escrow would be included in the next monthly Escrow re-projection.

Can I pay in advance to my Escrows to avoid an end of the year shortage?

Payments into the Escrow accounts can be made at any time at any Member Center, through the mail, or by contacting CEFCU. The transaction needs to be specifically identified as a Mortgage Escrow Payment, not a regular Mortgage Payment.

What are the procedures to close an Escrow account on a CEFCU mortgage?

  1. The borrower must send in a written request to cancel the Escrow account.
  2. Once the request has been received and reviewed, if approved, the Escrow funds will be refunded to the Savings account associated with the mortgage.
  3. The refund will be processed then deposited after the next Escrow reprojection, which takes place on or around the 15th of each month.
  4. It is possible the insurance premium or a tax installment may be processed before the Escrow account can be closed. However, any remaining funds will be refunded, and any future tax installments or insurance premiums will be the borrower’s responsibility.

Are there restrictions or eligibility requirements when an Escrow account cannot be closed?

  • If a Member has a history of mortgage payment delinquency, then the escrows will not be waived.
  • Mandatory escrows for the life of the loan were required at loan origination.
  • Escrow has negative balance or shortage, required to be brought to a zero balance to close the Escrow account.

Are there restrictions or eligibility requirements for opening an Escrow account?

CEFCU does not offer mortgage Escrow accounts in the following states due to state Escrow statutes: Connecticut, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Oregon, Rhode Island, Utah, Vermont, or Wisconsin.

If you have questions concerning your Escrow account or Escrow Account Disclosure Statement, please contact CEFCU.

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Mandatory Escrows are required for Home Loans when they meet any one of the following: Loan-to-value is greater than 80 percent, a borrower's FICO score is 649 or less or a borrower's debt-to-income ratio is greater than 45 percent, or the interest rate exceeds the APOR by more than 1.5 percent.

State regulations vary concerning Escrow accounts, so they may not be available for borrowers in some states. Please contact us to get specifics on your state.