Homeowners’ Escrow Savings Act

The Homeowners' Escrow Savings Act requires mortgage servicers to pay interest on funds held in escrow accounts for federally related loans, aiming to ensure borrowers receive a fair return on their prepaid taxes and insurance. To determine how much interest to pay, the bill mandates that servicers use the average yield on one-year U.S. Treasury securities as the baseline rate. Additionally, the law clarifies how servicers must estimate future tax payments and requires them to make these estimates as accurate as possible based on available information. While the federal rule sets a minimum standard, it explicitly allows states to enforce stricter requirements or alternative payment methods if they choose.