Surplus, Shortage, and Deficiency Amounts

It is possible for the member’s escrow account to reflect one of the following conditions:

• Surplus - A surplus exists when the lowest anticipated balance for the escrow share account exceeds the minimum balance required for the share account. The minimum balance required is based on the cushion amount which can vary.
• Shortage - A shortage exists when the lowest anticipated balance for the escrow share account is less than the minimum balance required for the share account.
• Deficiency - A deficiency exists when the lowest anticipated balance for the escrow share account is less than zero.
• Shortage and Deficiency - This combination exists when the lowest anticipated balance for the escrow share account is less than the minimum balance required for the share account and is also less than zero.

A loan can have a shortage without a deficiency, but cannot have a deficiency without a shortage.

Determining the Surplus, Shortage, and Deficiency Amounts

The system calculates any surplus, shortage, or deficiency during the escrow recalculation process.

If the member has a surplus that is less than the amount specified in the Min Amt To Refund Surplus field on the 465 Report Rules, that amount will appear as a negative figure in the Total Amount field in the Next Period group box on the Loan Escrow Item dialog box for escrow item 0 (zero). If the surplus is greater than that amount, the system will not create or update the escrow item 0 (zero).

If the member has a shortage or deficiency, that amount will appear as a positive figure in the Total Amount field in the Next Period group box on the Loan Escrow Item dialog box for escrow item 0 (zero).

If the member has both a shortage and a deficiency, the aggregate total of the two amounts will appear as a positive figure in the Total Amount field in the Next Period group box on the Loan Escrow Item dialog box for escrow item 0 (zero).

Settling the Difference

The system will collect the shortage or deficiency amount or apply the surplus over a period of 12 months beginning with the first month of the analysis period. If the member wishes to settle the difference, withdraw the surplus amount or deposit the shortage or deficiency. Then...

• If 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), adjust the Total Amount field in the Next Period group box on the Loan Escrow Item dialog box for escrow item 0 (zero) by the deposit or withdrawal amount.
• If the escrow account has been recalculated, the loan payment amount changed, and the information in the Next Period group box has been transferred to the Current Period group box (status C), adjust the Total Amount field in the Current Period group box on the Loan Escrow Item dialog box for escrow item 0 (zero) by the deposit or withdrawal amount.