What happens if a borrower has an excess balance of $50 or more in their escrow account according to RESPA?

Under the Real Estate Settlement Procedures Act (RESPA), if a borrower has an excess balance of $50 or more in their escrow account, the correct course of action is that it must be returned to the borrower. RESPA sets clear regulations regarding the management of escrow accounts, including how surplus funds should be handled to ensure borrowers are treated fairly.

When there's an excess in the escrow account beyond what is necessary to cover anticipated expenses (such as property taxes and homeowners insurance), the lender is obligated to refund that amount to the borrower. This protects borrowers from having their funds held unnecessarily, which could otherwise be used for other financial commitments or savings. The law aims to offer transparency and fairness in the management of escrow accounts, making it important for lenders to comply by returning excess funds promptly.