Federal Mortgage LawsQuestion 32 of 400
Under RESPA, a lender may require a borrower to maintain an escrow cushion of no more than how much of the estimated annual escrow disbursements?
a.One month
b.Two months (one-sixth of annual disbursements)
c.Three months
d.Six months
Explanation
RESPA/Regulation X limits the escrow cushion to no more than one-sixth of the estimated annual disbursements, which equals about two months of escrow payments. One month is below the allowed maximum, and three or six months exceeds the RESPA limit. This prevents servicers from over-collecting escrow funds.
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