The Vermont Statutes Online
Banking and Insurance
LENDING REPORTS, DISCLOSURES, AND STANDARDS
10404. Home loan escrow accounts
(a) As used in
"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.
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.
"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
(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
(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.)