Vermont § 10404 - Home loan escrow accounts

§ 10404. Home loan escrow accounts

• (a) As used in this section: (1) “Borrower” means one or more natural persons who are obligated to make escrow account
  payments under the terms of a loan agreement secured by residential real estate occupied
  by the borrower. (2) “Escrow account” means an account into which a borrower is required under the terms
  of a residential real estate loan agreement to make periodic payments of property
  taxes, insurance premiums, or other similar charges. (3) “Lender” means a person who services or holds the beneficial interest in a loan secured
  by residential real estate located in this State and who requires periodic payments
  by a borrower into an escrow account in accordance with the provisions of a residential
  real estate loan agreement. (b) A lender shall pay into an escrow account for the benefit of the borrower interest
  on funds deposited into the account under the same conditions as the lender’s regular
  savings account, if offered, and otherwise at a rate not less than the prevailing
  market rate of interest for regular savings accounts offered by local financial institutions,
  calculated on the basis of the average monthly balance in the account and credited
  on the first day of each quarter. This subsection shall not apply when a lender requires
  payment into an escrow account because a borrower has failed, within the past year,
  to make timely payments for property taxes and insurance in accordance with the provisions
  of the loan agreement. (c) A lender shall not require a borrower to deposit into an escrow account any greater
  sum than is sufficient to pay taxes, insurance premiums, and other charges with respect
  to the residential real estate, subject to the following additional charges: (1) a lender may require aggregate annual deposits no greater than the reasonably estimated
  total annual charges plus one-sixth of such total; and (2) a lender may require monthly deposits no greater than one-twelfth of the reasonably
  estimated total annual charges plus an amount needed to maintain an additional account
  balance no greater than one-sixth of such total. (d) A lender shall make timely payments of all charges with respect to the residential
  real estate payable from the escrow account. (e) The lender shall maintain escrow account funds in a federally insured depository institution. (f) With respect to borrowers who have maintained escrow accounts in accordance with the
  provisions of the loan agreement, the lender shall be primarily obligated for the
  payment of any municipal or county taxes, insurance premiums, or other similar charges
  with respect to the residential real estate, and any penalties attributable to the
  lender’s late payment of such charges. (g)(1) At least annually, at the completion of the escrow account computation year, a lender
  shall conduct an escrow account analysis to determine the borrower’s monthly escrow
  account payments for the next computation year based on the borrower’s current tax
  liability, if made available to the lender either by the borrower or the municipality,
  after any applicable adjustment for a State credit on property taxes. (2) Upon receipt of a revised property tax bill, the lender shall review the property
  tax bill and, upon verifying that it has been reduced since the date of the last escrow
  account analysis, the lender shall, within 30 days of receiving the bill, conduct
  a new escrow account analysis, recalculate the borrower’s monthly escrow payment,
  and notify the borrower of any change. (3) At least annually, and whenever an escrow account analysis is conducted or upon request
  of the borrower, the lender shall provide to the borrower financial statements relating
  to the borrower’s escrow account in a manner and on a form consistent with the federal
  Real Estate Settlement Procedures Act. The lender shall not charge the borrower for
  the preparation and transmittal of such statements. (h) A borrower aggrieved by a violation of the provisions of this section, or a rule adopted
  by the Commissioner in connection with this section, may bring an action for injunctive
  relief, three times the amount of any interest unpaid in violation of this section,
  other damages, costs, and reasonable attorney’s fees. The Commissioner may bring an
  action in the Superior Court of Washington County for injunctive relief, restitution,
  and any administrative costs and attorney’s fees incurred as a result of a violation
  of this section. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2017, No. 70, § 2.)