Section 10 of the Real Estate Settlement Procedures Act sets limits on the amount of borrower money that a lender may hold in escrow. An escrow account may include taxes, homeowner’s insurance, flood insurance, private mortgage insurance and other charges related to the property. The Act prohibits lenders from collecting and holding more money than is necessary. Prior to the Act some lenders held excessive amounts of escrow money and used the excess as a cushion against the borrower’s default. Because of Section 10 the lender can now only hold 1/12 of the total amount of disbursements payable during the year. The lender may also hold a cushion of 1/6 of the total disbursement for the year. If the amount collected at closing is greater than the amount allowed by RESPA, the lender will give an aggregate adjustment credit to get back into compliance. In addition, the lender must perform an annual analysis of escrows and notify the borrower of any shortages as well as refund any excess funds over $50.
Famous South Carolinians: One of my favorite South Carolinians is Wofford College Football Coach Mike Ayers. This week Coach Ayers retired after 30 years at Wofford. While I could spout off all the awards such as National Coach of the Year (2003) or Southern Conference Coach of the Year (five times) or brag about his five Southern Conference Championships or 218 wins, that is not what makes Coach Ayers special. What sets him apart is the fact that everyone who played for him will tell you it is not what Coach Ayers taught them on the field that is important, it is how he helped shaped and mold them into the men and leaders they are today. If you are a Wofford graduate you know what I mean. Football was always secondary. Doing right in the classroom and in life was the players priority. If every coach cared about his players like Coach Ayers does, we would rarely see their names in the paper for anything other than for success. For me, the words Coach Ayers said at Tripp Weeds funeral still reverberate in my mind. Coach Ayers was not just a coach of football players, he was a coach of men. We wish him the best in his retirement.