An escrow account is a special account set up by the lender to hold funds used to pay the required insurance and/or taxes on your property. If your loan is escrowed, a portion of your payment goes into your escrow account every month. Your escrow balance cannot be used to pay amounts owed, such as principal and interest payments or fees.
Note: If your loan was transferred to us, and you had an escrow account with your previous servicer, your escrow account will transfer as well.
An escrow cushion is extra money lenders may require borrowers to include in their monthly mortgage payments. It is a safety net to cover potential increases in property taxes or homeowner insurance premiums. If these costs rise and as a precautionary measure, escrow cushions help to ensure there are sufficient funds to prevent shortages. By law, the bank can hold two months of escrow as a cushion although OceanFirst Bank currently holds a one-month cushion.
If you do not have an escrow account and prefer one, submit a request in writing to escrowinsurance at oceanfirst dot com to add an escrow account. Please include your name, account number and the start date.
If you have a residential or consumer loan and want to remove your escrow account, please submit your request in writing to escrowinsurance at oceanfirst dot com.
Note: If your property is in a Flood Zone and is required to maintain flood insurance the bank is required to escrow for said insurance.
For a commercial or business loan, please reach out to your Relationship Manager to discuss removing escrow requirements from your loan account.An escrow analysis is conducted by the lender to ensure funds in escrow accounts are sufficient to cover the upcoming expenses for property taxes, homeowners’ insurance, and other related costs. The analysis calculates how much money needs to be collected and held in an escrow account to pay these expenses on behalf of the borrower.
Typically, the analysis is held annually, but it can occur when there are significant changes in property taxes (i.e., Added assessments) or insurance premiums. If the account reflects a shortage in the escrow account, the borrower is required to make additional payments to cover the shortfall. Typically, the shortage is divided by 12 resulting in an increased payment. If there is an overage, a refund is issued for amounts over $50.00. If the refund is under $50.00, the escrow account is reduced by 1/12 of the refund.
The borrower can request in writing to pay the shortage in one lump sum. Once the payment has been processed the escrow payment is adjusted but may not revert to the original amount.
OceanFirst Bank does not currently offer electronic escrow analysis disclosures through Digital banking. An annual escrow disclosure is mailed to the address on record annually.
An escrow shortage occurs when the funds in your escrow account are insufficient to cover the required payments for property taxes and homeowner’s insurance, or other related expenses related to your property. Several factors can cause an escrow shortage:
- Property taxes increase – May not have collected enough funds for a property tax increase to cover a higher tax bill.
- Insurance increases – May not have collected enough funds for homeowner insurance to cover new increased premium.
- Unforeseen costs – Unexpected expenses related to your property, such as added assessments or additional insurance requirements.
If the bank escrows for your taxes, you do Not need to provide us a copy of the bill unless it is an added assessment. The bank receives normal tax bills for accounts that are escrowed.
OceanFirst Bank uses a third-party vendor for monitoring insurance policies. The third-party vendor will request copies of current declarations pages when notified the policy is expired or cancelled. Hazard and/or flood may be required on your property, if the declaration page is not received in a timely manner, the property is placed on forced place insurance.
Contact Escrow at escrowinsurance at oceanfirst dot com, call 1-888-623-2698, or visit your local OceanFirst branch for further instructions.
Mortgage Insurance is a type of insurance that protects the lender in case the borrower defaults on their mortgage payments. If you made a down payment of less than 20%, typically mortgage insurance is required.
Mortgage insurance can typically be removed through the following methods:
- Automatic termination – when your loan balance is scheduled to reach 78 percent of the original value of the property. No cost to the borrower.
- Requesting cancellation – you can request to cancel your PMI on or after the date the loan balance reaches 80 percent of the original value of the property.
- If your mortgage origination date is at least five years, and your loan balance is no more than 80 percent of the new valuation, you can ask for PMI cancellation.
- If your mortgage origination date is at least two years, your remaining mortgage balance must be no greater than 75 percent of the new valuation to request PMI cancellation.
- Note: Appraisal must be completed at borrower’s expense by bank approved company.
- Submit your request to cancel mortgage insurance in writing to escrowinsurance at oceanfirst dot com.