Q: How long can a lenderA Lender is a person, company, corporation, or entity that lends money for the purchase of real estate. take to return funds held in escrow for the payment of real estateReal Estate is land and anything permanently attached to it, such as buildings and improvements. taxes and insurance once the loanA Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds.. is paid off?
Does the lender have to pay interest on the money if they take too long to pay the money back?
A: Good question. Most borrowers escrow the cash to pay real estate taxes and homeowners’ insurance premiums. Each month, one-twelfth of these payments are added to the mortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home. payment that is due.
While some lenders don’t require any deposits, and others may only escrow for real estate taxes, when the borrower pays off the loan in full, the borrower is entitled to a refund of all money held by the lender for both the real estate taxes and insurance premiums.
In some cases, lenders will apply the refund for real estate tax and insurance escrows towards the money needed to payoff the loan. But in other cases, the lenders wait to receive the final payment and then release the money.
Generally, Federal regulations require lenders to return the funds within a month or two. If they fail to return the funds within that period, you can file a complaint with the Department of Housing and Urban Development against the lender.