Adding Escrow Items
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Once you set up a new escrow loan, you must add escrow analysis information in order for the loan to recalculate the required payment to cover the additional costs for taxes or insurance. If the escrow amounts are unknown at new account time, an estimated amount may be used for analysis purposes. When the actual billings for insurance and taxes are presented, you can adjust the associated escrow item(s) using the Loan Escrow Item dialog box.
The Loan Escrow Item dialog box allows you to define specific information about each escrow item including the current and next period analysis information. Current period information reflects the escrow amounts to be collected from the member between the last and next analysis dates displayed on the Loans - Escrow Information tab for the loan. Next period information reflects what you anticipate will be required for the next analysis period.
You must complete a Loan Escrow Item dialog box for each escrow item associated with the loan. Escrow items are identified by type. Each type has an associated escrow number. Valid types are insurance (I), qualified mortgage insurance (P), tax (T), and over/shortage/adjustment (O). The numbers allowed for the insurance and tax types are 1-9. Zero (0) is used for the over/shortage/adjustment escrow item and is automatically added by the system when an escrow loan goes through analysis and an overage or shortage is calculated.
To access the Loan Escrow Item dialog box, click Add in the Escrow Information grid on the Loans - Escrow Info tab, or click the details icon button to display the Loan Escrow Item dialog box and view the escrow item.
How do I? and Field Help
For an existing escrow item, select the escrow number from the drop-down list and click the green arrow to view the escrow item details.
Click New to add a new escrow item. Complete the following information in the Item Type group box to add a new escrow item.
| Field | Description |
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The number of the escrow item. The valid options are: 0 - Over/short amount (system generated) 1 through 9 - Tax or insurance Reporting Analytics: Escrow Number (Member Automated Transfer subject in the Member Information folder and ME Member Automated Transfer subject in the Month-end Information\Member Month-end folder) |
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The type of escrow item.
Keyword: TY Reporting Analytics: Escrow Type (Member Automated Transfer subject in the Member Information folder and ME Member Automated Transfer subject in the Month-end Information\Member Month-end folder) |
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The credit union-defined description for escrow item if the escrow item is Insurance, Tax, or Qualified Mortgage Insurance. The description for escrow item type zero (0) is OV/SH/ADJ. Length: 25 alphanumeric Keyword: DE |
Complete the following information in the Current Analysis Period group box to add a new escrow item.
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The disbursal amount for this escrow item for the current analysis period. Maintenance to this field will update the loan payment amount and the payroll distribution amount. For escrow item zero (0), this amount is the calculated shortage/surplus in the escrow share account as determined by the escrow month-end recalculation. Length: 12 numeric including decimal Keyword: CA |
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The disbursal month and year of this escrow item for the current analysis period. The system will advance this date based on the frequency specified in the Disbursal Frequency field at the time analysis occurs unless a valid date appears in the Next Period Disbursal Date field. Keyword: CD Format: MM/YY |
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The frequency that the credit union will be disbursing the escrow item during the current analysis period. The valid options are: A - Annually B - Every other year T - Every three years M - Monthly Maintenance to this field will update the loan payment amount and the payroll distribution amount. Keyword: CF |
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Indicates how the system should recalculate each individual escrow item at the time of escrow recalculation for the current analysis period. The valid options are: L - Use the value in the Disbursement Current Period field as the amount to be collected from the member during the next analysis period. If the value in the field is zero, the system will use the value in the Current Period Total Amount field for the next analysis period. If the value in that field is zero or if the item is a new escrow item, the system will use the amount in the Next Period Total Amount field as the amount to be collected during the next analysis period. K - Use the value in the Next Period Total Amount field as the amount to be collected from the member during the next analysis period. You should maintain this field when you receive notification from an escrow recipient of a set amount to be disbursed for the next analysis period. For example, a member’s insurance company may notify the credit union several months ahead of time that the member’s annual premium will be increasing from $480 to $505 for the next analysis period. In that case, you should enter $505 in the Next Period Total Amount field, and change the Calculation Option field to K. I - Use the value specified in the Inflation Factor field on the 465 Report Rules to determine the amount to be collected from the member during the next analysis period. The factor will be applied to the amount in the Disbursement Current Period field, which is the actual amount disbursed for this escrow item during the current analysis period, to project the next period amount. If the value in that field is zero, the system will apply the inflation factor to the value in the Current Period Total Amount field for the next analysis period. If the value in the Current Period Total Amount field is zero or the item is a new escrow item, the system will apply the inflation factor to the amount in the Next Period Total Amount field to determine the amount to be collected during the next analysis period. Following is an example of how the system applies the inflation factor. The inflation factor is 01.04552, and the Disbursement Current Period field specifies $630. Disbursement Current Period (630.00) x Inflation Factor (01.04552) = 658.68 The amount to be collected from the member for the next analysis period for this escrow item is $658.68. Note: If you use the consumer price index (CPI), you will need to know the CPI for the last year. If you do not have this information, please contact the Department of Labor Statistics or your league. Portico will not provide this information. D - Discretionary item. The system uses the value specified in the Next Period Total Amount field on the Loan Escrow Item dialog box as the amount to be collected from the member during the next analysis period. Refer to the RESPA Ruling for information on discretionary items. Note: The 465 Report must be scheduled in order for the system to recalculate the escrow amount. Keyword: CO |
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Indicates if projections for disbursements due during the escrow verification period should be included in the escrow analysis (466 Report). You can clear the checkbox to exclude projections for disbursements due. Portico automatically selects the checkbox after the system performs the analysis and generates the escrow analysis notice. Reporting Analytics: Include Disbursement Projections (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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Indicates the escrow item will auto expire. If not selected, the credit union determines when the escrow item expires, so it is no longer included in escrow analysis. If selected, the escrow item automatically expires at the end of the month of the expiration date. For escrow items with automatic disbursements set up, Portico turns off automatic disbursements at the end of the expiration month. Portico determines the number of months escrow should be collected for the item using the expiration date. Portico determines the escrow amount collected at payment time by taking the value and spreading it across 12 months. Reporting Analytics: Current Period Auto Expire (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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The expiration date of the escrow account. The system uses this credit union-defined date for reporting purposes. When this date falls within the next 2 months, the escrow loan will appear on Expiration Report 627. If your credit union receives the 627 Report, you should specify a date in this field if you want the loan to appear on the report. When the Auto Expire checkbox is selected, the escrow item automatically expires at the end of the expiration date month. Keyword: CE Format: MM/YY |
The fields in the Next Analysis Period group box are optional. If these fields are left blank, the system will use the values specified in the Current Period group box.
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The anticipated disbursal amount for this escrow item for the next analysis period. If this field is left blank, the value in the Current Total Amount field will appear in this field. Length: 12 numeric including decimal Keyword: NA |
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The anticipated disbursal month and year of this escrow item for the next analysis period. The system will advance this date based on the frequency specified in the Disbursal Frequency field at the time analysis occurs. Keyword: ND Format: MM/YY |
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Click the Disbursal Frequency down arrow to select the frequency that the credit union will be disbursing the escrow item during the next analysis period. The valid options are: A - Annually B - Every other year T - Every three years M - Monthly If this field is left blank, the option specified in the Current Disbursal Frequency field will appear in this field. Keyword: NF |
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Click the Calculation Option down arrow to indicate how the system should recalculate each individual escrow item at the time of escrow recalculation for the next period. The valid options are: L - Use the value in the Disbursement Current Period field as the amount to be collected from the member during the next analysis period. If that field is zero, the system will use the amount in the Current Total Amount field for recalculation of the escrow item. On a new escrow item, the system will use the amount you enter in the Next Total Amount field. K - Use the value in the Next Period Total Amount field as the amount to be collected from the member during the next analysis period. I - Use the value specified in the Inflation Factor field (Consumer Price Index (CPI) on the 465 Report Rules to determine the amount to be collected from the member during the next analysis period. If that field is zero, the system will use the amount in the Current Total Amount field for recalculation of the escrow item. On a new escrow item, the system will use the amount you enter in the Next Total Amount field. D - Discretionary item. The system uses the value specified in the Next Period Total Amount field as the amount to be collected from the member during the next analysis period. Refer to the RESPA Ruling for information on discretionary items. If this field is left blank, the option specified in the Current Calculation Option field will appear in this field. Note: The 465 Report must be scheduled in order for the system to recalculate the escrow amount. Keyword: NO |
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Indicates the escrow item will auto expire. If not selected, the credit union determines when the escrow item expires, so it is no longer included in escrow analysis. If selected, the escrow item automatically expires at the end of the month of the expiration date. For escrow items with automatic disbursements set up, Portico turns off automatic disbursements at the end of the expiration month. Portico determines the number of months escrow should be collected for the item using the expiration date. Portico determines the escrow amount collected at payment time by taking the value and spreading it across 12 months. To change the auto expire option and expiration date in the current period when the Auto Expire checkbox is selected, you must use the Auto Expire check box and Expiration Date field in the Next Analysis Period group box . The Next auto expire option and expiration date update the current values the next time the escrow goes through analysis. The Next auto expire option and expiration date always update the Current auto expire option and expiration date. Reporting Analytics: Next Period Auto Expire (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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The expiration date of the escrow account. The system uses this credit union-defined date for reporting purposes. Keyword: NE Format: MM/YY |
The Payment Information group box displays the portion of the payment allocated for escrow, the number of payments left on the loan, and the disbursal amount for the current analysis period. When the escrow account has been recalculated, the loan payment changed, and the information in the Next Period group box has been transferred to the Current Period group box (status C), the Payment Portion field can be maintained.
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The portion of the loan payment allocated for the escrow account. The loan's scheduled payment amount has been adjusted to include this amount. The system calculates this amount when a new escrow item is added, or when maintenance is performed to the Current Total Amount field or Current Disbursal Frequency field. If the loan is a payroll-paid loan, any changes to this field will affect the payroll distribution amount. The system will change the payroll distribution to reflect the new payment amount, taking the scheduled frequency into consideration. If maintenance is performed to the loan payment frequency on the Loans - Payment tab, this field must be manually updated to the reflect the difference in the payment amount. Length: 12 numeric including decimal Keyword: PP |
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The number of payments that will be made to the escrow account in the current analysis period based on the payment frequency of the associated loan. Length: 2 numeric |
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The amount that has been disbursed during the current analysis period for this escrow item. The system will zero out this field when the payment is changed due to escrow analysis. When the system recalculates escrow, this amount is used for calculation options L and I. If this field is zero at the time of recalculation, the system will use the amount in the Total Amount field from the current period information. Length: 12 numeric including decimal |
Complete the following fields in the Disbursement Information group box to add a new escrow item.
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Select Vendor or GL from the To drop-down list to disburse the escrow item to a vendor or a general ledger account. |
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Enter the vendor code assigned to the vendor and click the green arrow. The vendor name will appear in the Tax Authority/Insurance Company/PMI Insurance field. Length: 6 alphanumeric Keyword: VC Reporting Analytics: Vendor Code (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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Enter the general ledger number and branch and click the green arrow. The general ledger name will appear in the Tax Authority/Insurance Company/PMI Insurance field. Length: 6 numeric for Account and 3 numeric for Branch Reporting Analytics: Disb GL Acct and Disb GL Branch (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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The escrow item type determines which field labels will appear:
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The unique identification code assigned to the property by the taxing authority or the policy number assigned by the insurance company. Length: 25 alphanumeric Reporting Analytics: Property Policy ID (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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Click the down arrow to select a future disbursement date from the pop-up calendar or enter a date in MM/DD/YYYY format. Keyword: DT Reporting Analytics: Auto Disb Date (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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The specific day of the month that the disbursement should occur in the Day field. Valid values are 1 to 31. If the Day of Month field is left blank, the day specified in the Disbursement Date field, in conjunction with the frequency, will be used to advance to the disbursement to the next disbursement date. When the Disbursement Date field specifies the 15th of the month, and 31 is entered in the Day of Month field, the first disbursement will be on the 15th and the remaining disbursements will occur at the end of month. Keyword: DY Reporting Analytics: Disb Day (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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Select the frequency of the escrow disbursement from the Frequency field. The valid options are: A - Annually M - Monthly Q - Quarterly R - Request Only S - Semi-Annual Keyword: FC Reporting Analytics: Disb Frequency (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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The amount of the disbursement. Length: 9 numeric Reporting Analytics: Disb Amount (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
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Select the Automate Disbursement check box to build a Transfer File record using transfer type E-Escrow Disbursement for the automated escrow disbursement. Portico will build the Transfer File record the morning of the disbursement date, then delete the record the same day. If the frequency is set to monthly, quarterly, semi-annual or annual, Portico will advance the disbursement date for a future withdrawal. If you enter disbursement information without selecting the Automate Disbursement check box, you must manually perform the share escrow withdrawal and enter the payee name and address on the Check Writer dialog box. If the Automate Disbursement of Escrow Checks check box is not selected on the Credit Union Profile - Products & Services tab, the Automate Disbursement check box appears, but it is disabled. If the Over/Short/Adjustment option is selected, the Automate Disbursement checkbox is disabled. The Automate Disbursement checkbox is cleared the end of the month an escrow item auto expires. Keyword: AE Reporting Analytics: Auto Disb Flag (All Escrow Current Analysis subject in the Loan\All Loan folder and the All ME Escrow Current Analysis subject in the Month-end Information\Loan Month-end\All Loan Month-end folder) |
The Disbursement Totals group box displays the prior year and current year disbursements for the escrow type.
| Field | Description |
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The prior year disbursements for the escrow type. At year end, the amount in the Current Year field will be moved to the Prior Year field. Length: 12 numeric including decimal |
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The current year disbursements for the escrow type. The Current Year field is updated each time a disbursement is made. You can maintain the Current Year field if disbursements have already been made during the year. At year end, the amount in the Current Year field will be moved to the Prior Year field. Length: 12 numeric including decimal Keyword: DB |
Click Save to save your changes. Click Delete to delete the escrow item.
Click Cancel to close the dialog box without saving your changes.
Maintaining Existing Escrow Items
The system will use the information from the Loans - Escrow Info tab and the information in the Next Period group box on the Loan Escrow Item dialog box to recalculate the escrow accounts for the member. Therefore, it is critical that the information on these transactions is correct. Verify the following information before the appropriate month end for each loan scheduled for escrow recalculation:
- The information on the Loans - Escrow Info tab for each member.
- The information for each escrow item on the Loan Escrow Item dialog box is correct, both on the current side, which reflects the escrow amounts that are being collected from the member today, and on the next period information, which reflects what you anticipate will happen during the next analysis period.
- The date in the Disbursal Date field for both the current and next period information.
To ensure an accurate escrow analysis and to help you in complying with RESPA regulations, there are limits on the maintenance allowed to fields on the Loans - Escrow Info tab and Loan Escrow Item dialog box, based on the status of the escrow account.
There are some fields on the Loan Escrow Item dialog box that cannot be maintained, regardless of the escrow status.
- The value in the Disbursement Current Period field is updated when financial transactions are performed that disburse funds from the escrow account, or reverse such transactions, and cannot be maintained.
- The value in the Number of Payments field is based on the loan payment frequency and cannot be maintained.
- The share type which receives the escrow deposits automatically appears in the Escrow Share Type field. It must be maintained on the Loans - Escrow Info tab.
Allowable maintenance of the remaining fields on the Loan Escrow Item dialog box is based on the escrow status.
- When the escrow account has been recalculated, the loan payment changed, and the information in the Next Period group box has been transferred to the Current Period group box (status C), only the next period information and the Payment Portion field can be maintained. Current period information cannot be maintained, because RESPA requires that a new analysis be completed and those results be disclosed to the member whenever you make any changes to the member’s current escrow options.
- When a loan has gone through escrow recalculation, but no analysis could occur because no escrow items existed (status E), a new Loan Escrow Item dialog box can be established for a loan.
- When a new loan that has not yet undergone escrow recalculation (status N), you can maintain all of the fields on the Loan Escrow Item dialog box except the fields previously defined as non-maintainable.
- When the associated loan balance is zero, and a short year statement has been generated (status P), none of the fields on the Loan Escrow Item dialog box can be maintained.
- When the escrow account has been recalculated, but the system has not yet changed the loan payment amount or transferred the information in the Next Period group box to the Current Period group box (status R), only next period information and the Portion of Payment field can be maintained.
- You can maintain the Current Year field if disbursements have already been made during the year.
You can change the next period information any time prior to the next analysis date cycle. Keep in mind that changes to the current period information on the Loan Escrow Item dialog box will change the payment amount and the payroll information immediately. When changes are made on the next period information, updates to payment amounts and payroll information take place in the month-end cycle following recalculation.
Automated Escrow Disbursements
If you currently use Transfer File, you can take advantage of an optional automated method for setting up and disbursing escrow payments to the tax authority or insurance company for members. Automated escrow disbursements relieves your staff of the burden of manually keeping track of monthly PMI payments. The automated escrow disbursement method is flexible enough to handle monthly, quarterly , semi-annual and annual insurance and tax payments.
The Loan Escrow Item dialog box lets you enter additional disbursement information and decide if you would like to automate an individual check to an insurance company or create a lump sum check for the same vendor for multiple members via a general ledger for tax authorities or PMI insurance. Individual checks will appear on the Withdrawal by Check window (accessed from the General Operations – Daily Checks menu). Each entity receiving an escrow disbursement can be tied to a vendor ID using Portico’s Accounts Payable system or assigned to a general ledger account. Accounts Payable is available to all credit unions at no additional cost. Using Accounts Payable for name and address information eliminates the need to re-enter the data each time a new loan is booked with an escrow disbursement to that vendor.
If the loan escrow item is for PMI insurance with a set payment amount and frequency, these disbursements can be set to disburse to a general ledger account. Using Transfer File, escrow funds are automatically withdrawn from the member’s escrow share account on the user-defined date and disbursed to the general ledger account defined on the Loan Escrow Item dialog box. The frequency and date to cut a check may be set in advance to meet the payment due date of the bill. Your credit union can cut a lump sum check from the general ledger account and send the check with a copy of the itemized billing to support the total check.
If the loan escrow item is for the tax authority or an insurance company, the amount may change each year, but the name and address of the payee remains the same. These entities can be set up in Accounts Payable as vendors also to eliminate re-entering name and address information on the Check Writer dialog box for the payee each year. You only need to verify and update the amount on the member’s Loan Escrow Item dialog box when a tax or insurance bill is received and enter the disbursement date for Portico to automatically perform a share escrow withdrawal and cut a check to the vendor. The property ID will be populated from the Loans – Escrow Info tab. The policy number or some type of reference information must be entered in the designated field on the Loan Escrow Item dialog box. This information will be passed to the Receiving Account Number field on the Member Transfer File Information dialog box to ensure the check reflects this information. The member name will print in a MEMO field on the check.
You can enter disbursement information for a loan escrow item on the Loan Escrow Item dialog box. When you select the Automate Disbursement check box on the Loan Escrow Item dialog box, Portico will build a Transfer File record the morning of the disbursement date, then delete the record the same day. If the frequency is set to monthly, quarterly, semi-annual or annual, Portico will advance the disbursement date for a future withdrawal.
If you enter disbursement information without selecting the Automate Disbursement check box, you must manually perform the share escrow withdrawal and enter the payee name and address on the Check Writer dialog box.
The automated escrow disbursements feature is available at no additional charge if you have Transfer File, where the Type field is B – Includes Checks on the Credit Union Profile – Products & Services tab and the Supported check box is selected in the Dividend by Check section on the Credit Union Profile – Shares tab.
You can set up the vendors who will receive an escrow disbursement in Accounts Payable using the Vendor Information - New window for both those you wish to cut an individual check for and a lump sum check. By creating a name and address record for each entity, the Check Disbursal window will automatically populate the payee name and address information. You may define a GL account for each vendor, which allows you to use the name and address information on the Accounts Payable – Checks Disbursal tab, but the GL account will only be affected when the GL account is entered on the Loan Escrow Item dialog box.
If a vendor code is specified on the Loan Escrow Item dialog box, on the disbursement date specified, Transfer File will generate a check using the Withdrawal by Check window (accessed from the General Operations – Daily Checks menu) for the disbursement amount specified. The alternate name and address fields on the Member Transfer File Information dialog box will be populated with the vendor name and address from Accounts Payable Vendor Information window. The property ID or insurance policy number will be passed to the RCV ACCT field on the individual vendor check and the member name will print in the MEMO field. If your credit union does not currently print the RCV ACCT field, a new template may be required. The Statement Description field will include the vendor name on the member’s statement description.
The Transfer File record is built in the Portico cycle and then deleted in the same cycle; therefore, it will not be visible to you.
If a general ledger account number is specified on the Loan Escrow Item dialog box, on the disbursement date specified, Transfer File will transfer the specified disbursement amount to the general ledger account number.
When the share escrow withdrawal is generated, Portico will debit the member’s share account and credit the Dividend by Check general ledger account or the escrow general ledger account specified on the Loan Escrow Item dialog box. The History – Financial Transaction History tab will display the following history codes with the name of the entity receiving the payment:
- IW-Withdrawal Insurance Payment
- TW-Withdrawal Tax Payment
- PW-W/D Qualified MTG Insurance Premium
When the transfer is successful, Portico will update the Current Year field in the Disbursement Totals group box on the Loan Escrow Item dialog box.
Three exception codes can appear on the Transfer File Register Report 434 for automated escrow disbursements:
- E1-Loan balance zero-no escrow disbursement to delete the escrow record.
- E2-Invalid Escrow Vendor Code add vendor information
- E3-Escrow Disbursement Loan not found- loan purged in Portico cycle, no escrow disbursement.
- Escrow Recalculation Report 465
- Escrow Disclosure Statement Report 466
- Mortgage Loan Activity Report 625
- Expiration Report 627
To reverse the transaction on the same day, perform the Reversals - Same Day Reversals tab. For a prior-day correction, update the Loan Escrow Item dialog box, and/or perform the Reversals - Prior Day Loan Reversal tab.
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