Understanding Escrow Account Statements

• An escrow account is set up to pay your property taxes and/or homeowners insurance.
• Each month, a portion of your monthly mortgage payment goes into your escrow account.
• When your mortgage insurance (MI), property taxes and/or homeowners insurance premiums are due, IBMC will pay those invoices with the funds that have accumulated in your escrow account.

Reminder:

• Your property tax amount is set by your taxing authority. Should you have questions about your property tax amount, you should contact your taxing authority.
• Your homeowners insurance premiums are set by your insurance company. Should you have questions about your homeowners insurance premium, you should contact your insurance company and/or agent.

• Minimum escrow balance requirements, known as your “cushion” are governed by Federal Law, or by your loan contract and applicable state law.
• Minimum escrow requirements help to prevent the escrow account from being overdrawn if property tax and/or homeowners insurance premiums increase.
• IBMC requires a two-month cushion, which is two months of property taxes and/or homeowners insurance. IBMC does not include in the cushion any MI, FHA or RD premiums that are paid monthly.

• The amount required for escrow is a moving target because your property tax bill and/or homeowners insurance premiums will change from year to year.
• The amount that IBMC collects each month to be held in your escrow account may change based on increases or decreases to your property tax and/or homeowners insurance premiums.
• Any changes will be reflected in the Escrow Account Statement that you receive annually.

• Once a year, IBMC is required to review your escrow account.
• We perform calculations to ensure that there are sufficient funds in the escrow account to pay your future MI, property tax, and/or homeowners insurance invoices when they are due.
• The Escrow Account Statement includes a history of the activity in your escrow account, the projected activity for the upcoming year, if you will have an escrow shortage or surplus, and your new monthly payment.

• Annual escrow account statements vary in length, depending on whether you have an escrow shortage.
• The top of the statement will provide you with an overview of your escrow account and the results of our analysis.

Section 1: Reflects your current monthly payment and the new monthly payment amount for next year. In this example, our customer had a shortage of $305.11, which will be spread out in 12 payments of $25.43 in addition to their regular monthly payment.

Section 2: Provides you with the anticipated escrow disbursements for the upcoming year and calculates the new monthly base escrow payment based on those expected distributions.

This section also displays the minimum balance required in your escrow account.

Section 3: Provides you with your escrow account history, including all payments into the account and all disbursements out of the account, for the 12-month period from the effective date of your last escrow account statement, if available.

Section 4: Provides you with additional information that helps explain why an escrow shortage may have occurred and provides you with contact information for IBMC’s Customer Service Department, should you need further guidance.

If you do have an escrow shortage, your account statement will include a separate page exclusive to the shortage. This page includes your new payment amount and your options on paying the shortage.

You may voluntarily choose to pay your shortage in one lump sum. A payment coupon is provided to you, should you choose to pay in a lump sum, so that you can mail that in with your check.

You may also choose to pay your shortage online at My IBMC Loan – Login

• If your escrow account statement shows the lowest projected balance in the year ahead is less than your minimum required balance, you will have a shortage.
• You will have two options to pay off the shortage:
  • By default, we will spread the shortage out over the 12-month period in the year ahead by adding a portion of your shortage to each monthly mortgage payment.
  • You may voluntarily choose to make a lump sum payment into your escrow account by mailing a check to IBMC in the amount of the shortage or paying the shortage online via MyIBMCLoan.

• If your lowest projected balance is more than your minimum required balance, you will have a surplus.
• IBMC will mail any surplus funds over $50 to you via check.
• If the amount of the surplus is less than $50, IBMC will apply the surplus to the first payment due on the effective payment change date on the account statement.

Paying via Autopay with IBMC:

• Monthly– your drafted payment will change automatically to the new payment amount effective with the month of your payment change. If you are paying your shortage amount, the updated amount will be observed.
• BiWeekly– your drafted payment will change automatically. Please note your biweekly drafts pull for the next month’s payment. For example, if your payment is set to change in December, your draft amounts will update in November to collect for the new payment amount.

Paying via Bill Pay Through Your Financial Institution:

You are responsible for updating the bill pay amount you authorize your financial institution to send to IBMC to satisfy your monthly payment. Whether your payment is increasing or decreasing, it is your responsibility to update the amount and appropriate effective month with your financial institution. Your financial institution, as a third party, is not aware of your payment change.

Paying via the Website:

The amount listed on the website for your monthly payment due will update automatically for the month of the effective payment change. Please go to www.myibmcloan.com to make that payment.

Paying via Check/Remittance Slip from Billing Statement:

The amount listed on the remittance slip will update automatically for the month of the effective payment change.

Please note: Paying your shortage as soon as possible will assist to ensure your payment changes are updated before your monthly billing statement generates, and/or any autopay you have
selected to enroll in initiates a draft.

Escrow account shortages result when there is an insufficient escrow balance to cover previous account history.

Your new monthly payment amount is based on projected account activity, which reflects any increases or decreases to your MI, property tax,  and/or homeowners insurance premiums.