Question

According to RESPA law, how much is allowed to be taken for the escrow account monthly?

1) 1/12
2) 1/24
3) 1/16
4) 10

Answer 1

RESPA Law allows lenders to collect no more than 1/12th of the estimated annual property taxes and homeowner's insurance premiums each month for the escrow account.

Step-by-step explanation:

RESPA Law and Escrow Accounts

The Real Estate Settlement Procedures Act (RESPA) is a federal law that protects consumers in mortgage transactions by requiring lenders to provide certain disclosures and by regulating certain practices. One of the provisions of RESPA is related to escrow accounts.

According to RESPA, lenders are generally allowed to collect no more than 1/12th of the estimated annual property taxes and homeowner's insurance premiums each month for the escrow account. This ensures that homeowners have enough funds in the escrow account to cover these expenses when they become due.

Therefore, the correct answer to your question is 1) 1/12.