A servicer must issue a short year escrow statement within how many days of loan payoff?

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The correct answer is that a servicer must issue a short year escrow statement within 60 days of loan payoff. This requirement is important because it ensures that borrowers receive a clear and accurate accounting of their escrow account after their loan is paid off. The short year escrow statement provides a summary of the transactions that occurred in the escrow account for the portion of the year leading up to the payoff, helping to clarify any remaining balances, disbursements, or potential refunds.

Timeliness is crucial for borrowers, especially in understanding their financial position after the loan has been settled. By requiring servicers to issue this statement within a designated timeframe, the regulation aims to promote transparency and accountability in the handling of escrow funds, allowing borrowers to adequately plan their finances post-payoff.

In relation to the other options, the timeframe of 90 days, 180 days, or 365 days would not align with the intention of providing prompt and relevant information to the borrower following the completion of their loan, thus reducing the effectiveness and timeliness expected from such disclosures.

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