Luttrell Wants Mortgage Escrow Account Payments
Legislation filed by state Rep. Ken Luttrell would ensure that Oklahomans with a mortgage receive interest from their escrow account.
"Currently, lenders are holding millions of dollars in escrow accounts and reaping significant interest earnings as a result," said Luttrell, D-Ponca City.
"It's only fair that the Oklahomans paying into those accounts received at least a share of the profit."
Lenders often place a portion of a borrower's mortgage payments into an escrow account, which is used to pay all taxes or insurance due on the property. The money accrues through the year until the tax or insurance payment is due. In the meantime, lenders can earn interest off the money in the escrow account.
House Bill 2594, by Luttrell, would require lenders to pay a portion of the interest earnings to the consumer whose money is funding the account. Under the bill, each lender holding funds in an escrow account would be required to pay the borrower dividends or interest at least once per quarter, calculated at a rate equal to at least 50 percent of the one-year Treasury Note rate or "rate of a comparable instrument."
The lender could not deduct any charge for service from the interest or dividend payment.
At least once a year, lenders would be required to provide mortgagors a financial statement showing the interest credited on the escrow account.
"Oklahomans work hard for their money. Large corporations or out-of-state lenders shouldn't get free use of that cash," Luttrell said. "The banks certainly don't lend their money interest-free to consumers."
"Currently, lenders are holding millions of dollars in escrow accounts and reaping significant interest earnings as a result," said Luttrell, D-Ponca City.
"It's only fair that the Oklahomans paying into those accounts received at least a share of the profit."
Lenders often place a portion of a borrower's mortgage payments into an escrow account, which is used to pay all taxes or insurance due on the property. The money accrues through the year until the tax or insurance payment is due. In the meantime, lenders can earn interest off the money in the escrow account.
House Bill 2594, by Luttrell, would require lenders to pay a portion of the interest earnings to the consumer whose money is funding the account. Under the bill, each lender holding funds in an escrow account would be required to pay the borrower dividends or interest at least once per quarter, calculated at a rate equal to at least 50 percent of the one-year Treasury Note rate or "rate of a comparable instrument."
The lender could not deduct any charge for service from the interest or dividend payment.
At least once a year, lenders would be required to provide mortgagors a financial statement showing the interest credited on the escrow account.
"Oklahomans work hard for their money. Large corporations or out-of-state lenders shouldn't get free use of that cash," Luttrell said. "The banks certainly don't lend their money interest-free to consumers."
Labels: Ken Luttrell, Mortgage Escrow Accounts
posted by Mike McCarville @ 9:22 AM
<< Home