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How to Find Your Escrow Balance or Shortage

Your Annual Escrow Statement is designed to provide detail of your escrow (or impound) account. It shows how much money was collected towards your escrow account and how much was paid on insurance and/or property taxes during the previous year. An Escrow Statement also includes estimates, or projections, for the coming year.

The sample escrow statement indicates a projected low point of $284.30-. This amount is compared to your reserve balance, or cushion, to determine if a surplus or shortage exists.

When the projected low point is less than the required reserve, a shortage occurs. This is also called an escrow shortage.

In our example, the required reserve of $0.00 is compared to the projected low point of $284.30-, resulting in a shortage of $284.30. We make covering this escrow shortage easy for our borrowers by dividing the shortage amount across at least 12 months. This monthly amount is referred to as the "Shortage Spread" and is shown in the "New Payment Is As Follows" section at the top of your statement.

In our example, the shortage of $284.30 is divided by 12 months, resulting in an increase of $23.69 to your monthly payment. This monthly amount is the "Shortage Spread."

Although spreading the shortage may be preferred for some borrowers, you can also choose to pay the escrow shortage in full, if the account analysis discloses a shortage of less than one month’s escrow account payment. At the bottom of the statement is an "Escrow Shortage Remittance Form," which you could use to pay the shortage in full and would need to be paid within 30 days of the escrow analysis date. By doing this, the Total Payment amount indicated at the top of the statement would be lowered, and a new payment amount would result.

Please keep in mind that paying your escrow shortage amount in full will reduce your new monthly required escrow payment amount, but it will not lower the actual amount of your taxes and/or insurance premiums. Your new monthly required escrow payment depends on whether your taxes and/or insurance premiums have changed.

Your Escrow Account History and What It Means

In the section titled "Annual Escrow Account Disclosure Statement ‐ Account History," you can see the projected and actual deposits into your account, estimated and actual disbursements from your account, and the running escrow balance through the year.


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