Finding 1164795 (2025-001)

AL 14.117 Federal Housing Commission Division Mortgage Insurance Criteria The Agency is required to return to the borrower any escrow surplus within 30 days of the loan payoff date. Condition Of the 25 loan payoffs tested, we noted one instance where the escrow surplus was not returned to the borrower within 30 days of the loan payoff. Cause The Agency updated loan tracking software in the current year. There was an issue with the ‘next due date’ on the payoff screen not updating once a payoff quote has been saved. Effect Borrowers are potentially not receiving escrow surpluses in a timely manner. Questioned Costs $0 Recommendation We recommend the Agency review its procedures to monitor any escrow surpluses that need to be returned after loans have been paid off. Views of Responsible Officials We acknowledge the finding that an escrow surplus related to a loan payoff was not fully released to the borrower within 30 days as required. The lapse occurred due to a system error that caused excess funds to be retained for PMI at payoff, as well as delays in reconciliation and manual processing workflows, and not due to intentional noncompliance. Management recognizes the importance of adhering to RESPA and internal policy requirements to ensure borrowers receive timely refunds and avoid compliance risk. Repeat Finding This is a new finding.