Under federal law, a mortgage company must perform an escrow analysis at least once every 12 months, and it can run additional analyses outside that annual cycle when specific events disrupt the account. So the short answer to how often a mortgage company can do an escrow analysis is: once a year at minimum, and more often when something changes the numbers the servicer relied on.
The Once-a-Year Minimum
The Real Estate Settlement Procedures Act (RESPA) requires your servicer to analyze your escrow account once during each 12-month computation year.1eCFR. 12 CFR 1024.17 – Escrow Accounts The computation year is fixed when your loan originates and repeats on that same 12-month cycle unless a short-year event resets it.
During the review, the servicer audits every disbursement it made from the account — property taxes, homeowners insurance premiums, and any other escrowed charges — and compares those payments against what it collected from you each month. It also checks the account against the maximum cushion federal rules allow, which is one-sixth of the total estimated annual disbursements, roughly two months of escrow payments.1eCFR. 12 CFR 1024.17 – Escrow Accounts That ceiling exists so servicers don’t hold more of your money than they need to cover upcoming bills.
Property tax billing schedules vary. Some jurisdictions bill annually, others semi-annually or quarterly. The regulation treats property taxes as a single escrow item for analysis purposes, and the servicer projects disbursement dates based on the earliest deadline to avoid penalties.2Consumer Financial Protection Bureau. 1024.17 Escrow Accounts The cushion cap is calculated on total annual disbursements regardless of how many installments the tax authority requires.
Events That Trigger an Off-Cycle Analysis
The annual review is a floor, not a ceiling. Several situations allow — or require — your servicer to run an analysis in between.
Servicing Transfers
When your loan is sold or moved to a new servicer, the account resets. The prior servicer must send a short-year statement within 60 days of the effective transfer date, and the new servicer starts a fresh computation year.1eCFR. 12 CFR 1024.17 – Escrow Accounts In practice, that means an extra analysis may land in your mailbox any time servicing changes hands.
Loan Payoff
If you pay off your mortgage during a computation year, the servicer must send a short-year statement within 60 days of receiving payoff funds.1eCFR. 12 CFR 1024.17 – Escrow Accounts This closes out the account and accounts for any remaining balance.
Advances to Cover a Disbursement
If your servicer pays a bill the account couldn’t cover — for example, a tax installment that came in higher than projected — and the shortfall wasn’t caused by your own missed payment, the servicer must analyze the account to determine the exact deficiency before asking you to repay it.2Consumer Financial Protection Bureau. 1024.17 Escrow Accounts Without that mid-year analysis, the servicer can’t demand repayment.
Force-Placed Insurance
If your homeowners insurance lapses for reasons other than nonpayment and the servicer buys a lender-placed policy, the far higher premium can open a sudden gap in your escrow account. That gap typically forces a recalculation of your monthly payment outside the normal annual cycle.
What You Should Receive After Every Analysis
Whenever your servicer runs the annual analysis, it must deliver an annual escrow account statement within 30 days of the end of the computation year.2Consumer Financial Protection Bureau. 1024.17 Escrow Accounts That statement is how you check the math.
It has to include:
- A prior-year comparison showing projected payments alongside the actual disbursements from the year that just closed.
- An upcoming-year projection with estimated monthly payment amounts and the dates the servicer expects to pay taxes, insurance, and any other escrowed charges.
- The lowest monthly balance the account reached during the previous year, which shows whether the cushion stayed within federal limits.1eCFR. 12 CFR 1024.17 – Escrow Accounts
- The dollar figure the servicer is holding as a cushion against unexpected cost increases.
At loan closing, you also receive an initial escrow statement itemizing anticipated taxes, insurance premiums, and other charges for the first computation year, along with expected disbursement dates. The servicer must provide it at settlement or within 45 calendar days afterward.2Consumer Financial Protection Bureau. 1024.17 Escrow Accounts
How the Results Change Your Payment
Every analysis produces one of three outcomes, and each carries its own rules about what happens next.
Surplus
A surplus means the servicer collected more than it needed. If the surplus is $50 or more, the servicer must refund it within 30 days of completing the analysis.1eCFR. 12 CFR 1024.17 – Escrow Accounts For surpluses under $50, the servicer can either refund the money or credit it toward next year’s payments.
Shortage
A shortage means the balance is below target at the time of the analysis. There is money in the account, just not enough. Recovery rules depend on the size of the shortage:2Consumer Financial Protection Bureau. 1024.17 Escrow Accounts
- If the shortage is less than one month’s escrow payment, the servicer can leave it alone, require a lump-sum payment within 30 days, or spread repayment in equal installments over at least 12 months.
- If the shortage equals or exceeds one month’s escrow payment, the servicer can leave it alone or spread repayment over at least 12 months, but cannot demand a lump sum.
If your servicer asks for a lump-sum payment, check whether the shortage actually falls under the one-month threshold before you pay.
Deficiency
A deficiency means the account has a negative balance, usually because the servicer advanced its own funds to cover a bill.1eCFR. 12 CFR 1024.17 – Escrow Accounts The servicer must run a full analysis before asking you to repay it, and the spreading rules mirror those for shortages: if the deficiency equals or exceeds one month’s escrow payment, the servicer must allow at least 12 months to repay it.
Disputing an Analysis That Looks Wrong
If a projected tax bill looks inflated, an unfamiliar disbursement appears, or the math on your statement doesn’t add up, RESPA gives you a formal dispute process. Send your servicer a written notice of error (sometimes called a qualified written request) that includes your name, information identifying the loan account, and a description of the error you believe occurred.3Consumer Financial Protection Bureau. 1024.35 Error Resolution Procedures
The servicer must acknowledge your notice in writing within five business days.4Office of the Law Revision Counsel. 12 US Code 2605 – Servicing of Mortgage Loans and Administration of Escrow Accounts It then has 30 business days to investigate and either correct the error, explain why the account is accurate, or provide the information you requested. The servicer can extend that window by up to 15 business days if it notifies you of the extension and the reason before the initial 30 days close.
Send the notice by certified mail with return receipt requested. Keep copies of the letter and any supporting documents, such as the actual tax assessment or your insurance declaration page showing the premium charged. If the servicer doesn’t respond or you’re unsatisfied with the resolution, you can file a complaint with the Consumer Financial Protection Bureau online or by calling (855) 411-2372.