Compliance Q&A: RESPA and Escrow Accounts

Q. Does RESPA require that we collect a cushion for escrow accounts? How large of a cushion must be collected?

A. RESPA allows you to have up to 2 months’ cushion in an escrow account but doesn’t *require* that you have 2 months’ cushion.

“Cushion or reserve (hereafter cushion) means funds that a servicer may require a borrower to pay into an escrow account to cover unanticipated disbursements or disbursements made before the borrower’s payments are available in the account, as limited by § 1024.17(c).” 12 CFR § 1024.17

“…In addition, the servicer may add an amount to maintain a cushion no greater than one-sixth (1/6) of the estimated total annual payments from the account…” 12 CFR § 1024.17(c)


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