Insurance & Taxes.(Brief Article)

Managing escrow for insurance and tax purposes can provide an additional profit opportunity for mortgage lenders, or it can be a great big headache. In some cases, servicers may face a little bit of both. Escrow accounts provide an opportunity for lenders to gain valuable "float" income, as long as it's allowed under state and federal law. But lenders that hold too much money in escrow could find themselves running afoul of regulations. And some state laws have an impact on whether or not lenders must pay interest to consumers for escrow accounts.

With interest rates at record low levels in recent years, lenders have been able to obtain some relief from calls that they should pay interest income to consumers. But low interest rates on escrow accounts also means that lenders themselves receive less float income.

Nonetheless, maintaining escrow ...