Posted by jojo_MN on 1/5/13 9:16am
Msg #449017

Reply to a remark Simone made today on an earlier post

I don't want any more traffic the the post I to which I am referring, so am replying here.

"She also said the impound account was a requirement from the lender. Wrong again, It is never a requirement and neither is the company that they choose for their hazard insurances. "

I believe you are wrong on the part of the lender never requiring escrow. Many of them, in fact, do require the escrow as a condition of them having the loan. Those lenders have a disclosure in the package stating that they require it. If you work for more than company I'm sure you can remember a page where there are four check boxes.

___ The lender does require Escrow...
___ The lender does not require escrow...
___ The borrower requests escrow...
___ The borrower does not require escrow...(wording may be different, but I'm sure you get the message)

I don't know about the rest of the country, but in WI, MN and IA companies cannot require that a borrower uses a certain insurance company; however, they all require the borrower to carry insurance.

Reply by ArtG/KS on 1/5/13 9:44am
Msg #449023

Back thirty years ago some companies required an escrow/impound account for taxes and insurance. Many still do today. As far as in KS is concerned, if payments are not late, the borrower/homeowner makes the decision who the insurance company will be as long as its an approved company by the KS Insurance Commission.

That said, Ive seen tactics where lenders have tried to get a favored insurance company to be the carrier. Here in KS it is possible the borrower may choose to pay direct for insurance and taxes. Some lenders will allow that only after a certain percent of the loan is payed down. Other states may have differing regulations on this.

Reply by MW/VA on 1/5/13 10:01am
Msg #449029

Yes, that's not my experience. FHA or VA do require escrow

accts., and most lenders are now requiring it, too. It's all about their risk factor. There was a time that if you had sufficient equity, etc., you could request not to escrow for taxes & insurance. I've seen many stellar borrowers being required to escrow.
In VA it is illegal for any co. to require insurance through a particular co.