§10404. Home loan escrow accounts

Link to law: http://legislature.vermont.gov/statutes/section/08/200/10404
Published: 2015

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The Vermont Statutes Online



Title

08

:
Banking and Insurance






Chapter

200

:
CONSUMER PROTECTION






Subchapter

004
:
LENDING REPORTS, DISCLOSURES, AND STANDARDS










 

§

10404. Home loan escrow accounts

(a) As used in

this section:

(1)

"Borrower" means one or more natural persons who are obligated to

make escrow account payments under the terms of a loan agreement secured by

residential real estate occupied by the borrower.

(2) "Escrow

account" means an account into which a borrower is required under the

terms of a residential real estate loan agreement to make periodic payments of

property taxes, insurance premiums, or other similar charges.

(3)

"Lender" means a person who services or holds the beneficial interest

in a loan secured by residential real estate located in this State and who

requires periodic payments by a borrower into an escrow account in accordance

with the provisions of a residential real estate loan agreement.

(b) A lender

shall pay into an escrow account for the benefit of the borrower interest on

funds deposited into the account under the same conditions as the lender's

regular savings account, if offered, and otherwise at a rate not less than the

prevailing market rate of interest for regular savings accounts offered by

local financial institutions, calculated on the basis of the average monthly

balance in the account and credited on the first day of each quarter. This

subsection shall not apply when a lender requires payment into an escrow

account because a borrower has failed, within the past year, to make timely

payments for property taxes and insurance in accordance with the provisions of

the loan agreement.

(c) A lender

shall not require a borrower to deposit into an escrow account any greater sum

than is sufficient to pay taxes, insurance premiums, and other charges with

respect to the residential real estate, subject to the following additional

charges:

(1) a lender may

require aggregate annual deposits no greater than the reasonably estimated

total annual charges plus one-twelfth of such total; and

(2) a lender may

require monthly deposits no greater than one-twelfth of the reasonably

estimated total annual charges plus an amount needed to maintain an additional

account balance no greater than one-twelfth of such total.

(d) A lender

shall make timely payments of all charges with respect to the residential real

estate payable from the escrow account.

(e) The lender

shall maintain escrow account funds in a federally insured depository

institution.

(f) With respect

to borrowers who have maintained escrow accounts in accordance with the

provisions of the loan agreement, the lender shall be primarily obligated for

the payment of any municipal or county taxes, insurance premiums, or other

similar charges with respect to the residential real estate, and any penalties

attributable to the lender's late payment of such charges.

(g) The lender

shall provide annually, or upon request of the borrower, financial statements

relating to the borrower's escrow account in a manner and on a form approved by

the Commissioner. The lender shall not charge the borrower for the preparation

and transmittal of such statements.

(h) A borrower

aggrieved by a violation of the provisions of this section, or a rule adopted

by the Commissioner in connection with this section, may bring an action for

injunctive relief, three times the amount of any interest unpaid in violation

of this section, other damages, costs, and reasonable attorneys' fees. The

Commissioner may bring an action in the Superior Court of Washington County for

injunctive relief, restitution, and any administrative costs and attorneys'

fees incurred as a result of a violation of this section. (Added 1999, No. 153 (Adj.

Sess.), § 2, eff. Jan. 1, 2001.)
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