Escrow shortage

If taxes or insurance cost more than the escrow account was built to cover, the analysis can show a shortage. The servicer then explains how the account will be brought back toward the target. A shortage is about the escrow cushion and upcoming bills, not about principal and interest on the note. This page does not list the exclusive ways a servicer may collect it.

12 CFR 1024.17(b) defines a shortage as the amount by which the current escrow balance falls short of the target balance at analysis. Treatment rules are current-authority detail, not this definition.

Borrowers often see a higher monthly payment after a shortage and need to know the interest rate may not have changed.

• Escrow analysis

This page does not state how a shortage must be repaid or on what calendar.