General Mortgage KnowledgeQuestion 149 of 400
During an annual escrow analysis, the servicer discovers a shortage. What typically happens?
a.The monthly escrow portion is increased to cover the shortage
b.The loan is called due
c.The interest rate rises
d.PMI is added
Explanation
When taxes or insurance rise, an escrow shortage occurs and the servicer raises the monthly escrow payment (and may allow a lump-sum option) to replenish the account. It does not accelerate the loan, change the rate, or add PMI.
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