Servicing Guide

Published September 9, 2020

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What expenses are allowed to be paid from the mortgagor's escrow account during foreclosure proceedings?

The servicer must use any funds remaining in the borrower's escrow deposit account to pay T&I premiums that come due during the foreclosure process. The servicer also may use escrow funds to pay costs for the protection of the security and related foreclosure costs as long as state or local laws, government regulations, or the requirements of the mortgage insurer or guarantor do not preclude the use of escrow funds for these purposes. If the escrow balance is not sufficient to cover these expenses, the servicer must advance its own funds. See also Advancing Funds to Cover Expenses in B-1-01, Administering an Escrow Account and Paying Expenses for additional information.

For more information please see: E-3.2-10: Paying Certain Expenses During the Foreclosure Process 

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