Bank of America wants 16.6% Reserve in Escrow

[Lacerta]

Again, Banks can REQUIRE you to keep a reserve, under RESPA. They don't have to, but they are allowed to. RESPA limits that reserve so that the lowest balance in your account for the year cannot be MORE than 1/6th your annual taxes/insurance cost. Every year, they are supposed to send you a breakdown of your monthly balances for the year. You want to compare the lowest balance of the year to your total taxes/insurance for the year. If the minimum number is too high, they have to send you a refund (or if it is just a little high, I think they can reduce your payments for the next year, but I don't know where the breakpoint is for refund vs reduced payment). If the minimum number is too low, they can raise your payment to increase the reserve.

If you aren't getting an itemized year end summary, you should contact your bank. My current mortgage doesn't escrow, but my Wells Fargo one did, and the statement I got every December was very clear on exactly why my payment was changing and how much was this year's escrow and how much was reserve adjustment up or down.

If you are getting a year end summary and just don't understand it, that is what the internet is for. Or your accountant. Either black out your personal information and post it on a web page like this one, so people can help you interpret it, or take it to your accountant.

Requiring a reserve is not breaking any law. They are ALLOWED under RESPA to REQUIRE this reserve. RESPA is a federal law, so for those saying they are lying by saying federal law allows them to require a reserve, sorry, but you are just wrong.