Let’s Talk Escrow: What Is Escrow Analysis?

Estimated reading time: 5 minutes

If your mortgage requires one, you’re probably familiar with what an escrow account is. These are accounts that mortgage servicers (the company you send your mortgage payment to) use to save money to pay your property taxes and insurance. To fund them, a portion of your mortgage payment goes into the account each month toward your estimated costs. But you may ask, how do servicers estimate how much I’ll need to pay? That’s thanks to what’s called an “escrow analysis.” If you’re a Mr. Cooper customer, here’s how they work.

What is an escrow analysis?

An escrow analysis or “escrow review” is an evaluation of your escrow account that we do at least once a year. We look at how much you paid in property taxes and insurance over the past year, and then forecast how much you’ll need in the coming year. In fact, federal law requires that mortgage servicers do this prior to the opening of an account and each subsequent year.

Your escrow analysis will focus on three major areas:

• Your expected taxes and insurance premiums for the coming year. (Have your costs gone up or down?)
• Your escrow account balance, monthly payment amount, and minimum required balance. (Your minimum required balance is typically two times (2x) your monthly escrow payment.)
• The recent tax and insurance payments (or “disbursements”) we’ve made with your escrow funds.

Once the analysis is complete, you’ll receive an Escrow Review Statement. This will detail: 

• How much you paid in escrow each month last year.
• How much we paid for your taxes and insurance. 
• If your account ended up with a surplus or shortage. Learn more about escrow shortages and surpluses below.
• What your payment will be for the coming year.

Based on our projections, your mortgage payment may go up or down with your forecast taxes and insurance premiums.

For more on how escrow payments are calculated, see our article “Escrow 101.”

When is an escrow analysis done?

The timing of your analysis depends on your property’s state and is normally conducted around the same time each year. We typically time your analysis to be in sync with your state’s property tax schedule. We’ll also notify you when your analysis is coming up.

In the event your state charges taxes semi-annually or quarterly, we’ll do your analysis after we make your largest property tax disbursement. We explain more in the video below. 

Note: If your mortgage recently transferred to us, we may do an escrow analysis soon after your transfer’s effective date. Learn more in our Help Center’s “Escrow Analysis & Escrow Review Statement” article.

What if my escrow analysis projects a shortage or surplus?

Shortage

If your escrow analysis projects a shortage, that means that we’ve forecast that your escrow account won’t have enough funds to maintain its minimum required balance throughout the coming year. If that occurs, you’ll have two options:

• We can spread the shortage amount over the next 12 months of your payments. Note that this will increase your mortgage payment amount.
• You can voluntarily pay the shortage amount in a lump sum before your new payment’s effective date. 

Note: If you pay the shortage in a lump sum, your escrow payment may still go up. This will be the case if your base escrow payment (which is based on your projected taxes and insurance) has gone up for the coming year.

A shortage can also occur if your actual property costs ended up being higher than what we projected. If that occurs, we’ll pay the difference so your taxes and insurance are paid on time. From there, you can use one of the options above to repay the costs. We offer tips in the video below on how to avoid shortages like this.

Surplus

If your escrow account analysis forecasts a surplus, you may have more money in your pocket soon. 

• If your surplus is $50 or more and the account is current, you’ll receive a check within 30 days of your escrow analysis for the amount. (You can spend the check on anything you like.) Note: Current accounts in Nevada (NV) will be sent a surplus check for any amount, even if it is less than $50.
• If your surplus is $50 or more and the account is delinquent, the surplus will stay in your escrow account for future disbursements.
• If the surplus is less than $50 (whether the account is current or delinquent), we’ll spread the amount over the next 12 months, lowering your monthly payment. Note: Delinquent accounts in Nevada (NV) will also have the surplus amount spread out over the next 12 months.

Learn more about escrow shortages and surpluses in our Help Center.

Additional escrow analysis resources

Have more questions about your escrow analysis? 

• Access our chat feature for quick answers: Chat is available on our main website, www.mrcooper.com, in locations such as our Help Center.
  • Live agents are available during business hours (Monday – Thursday, 7 a.m. – 8 p.m. (CST) and Friday, 7 a.m. – 7 p.m.).
  • Our virtual assistant is available 24/7.

• Contact us from your online account: Sign in to reach a live agent or to leave a message in our secure Message Center. For the best chat experience, please sign in first. If you need one, you can create an online account here.

• Go to the Escrow Analysis page in your online account.

• Visit the “Escrow, Taxes, & Insurance” page in our Help Center.

• Check out our Mortgage Minute videos on escrow and more.