274-045-0150 Property Tax Amortization and Escrow Accounting (1) Except as otherwise provided herein, payments required on all loans shall include an amount, which represents advances, for taxes paid by the Director of Veterans' Affairs (Director) on the security. If for any reason the taxes cannot be paid on November 15th, the Director will send the notice as soon as possible after the taxes are paid. (2) All applications, for permission to pay taxes and hazard insurance directly, will receive a written approval or disapproval from the Director. If the application is approved, the applicant will be advised of the date when the Director will discontinue making disbursements, if applicable, and the date the loan payment will be adjusted, if necessary. (3) The Director may revoke any permission granted concerning the payment of taxes and hazard insurance on the security by giving the owner of the security 30 days written notice of the revocation, except as otherwise provided herein. If the Director advances funds to pay unpaid taxes and/or hazard insurance, any advance by the Director for such a shortage/deficiency also will constitute immediate revocation by the Director of permission for the owner to pay directly any taxes and hazard insurance due on the security, and the account will revert to the last signed agreement between the Director and borrower for the payment of taxes, hazard insurance and other obligations. Any advances by the Director, including any interest and fee, shall be paid back within the remaining payment/escrow year. The borrower may not change this obligation without prior written approval from the Director. (4) Pursuant to the provisions of ORS 407.169, under this division, escrow accounts are available for the prepayment of estimated property taxes and hazard insurance premiums. (5) On monthly simple interest loans with escrow accounts, the required escrow payment may be based, inter alia, on the preceding year's disbursements for such items as property taxes, hazard insurance premiums, other required insurance premiums such as mortgage insurance, and condominium or homeowner’s association dues. In cases of unassessed new construction, the estimate may be based, inter alia, on the assessment of comparable residential property in the market area. (6) The Director will pay interest on the escrow account as provided by ORS 86.245(1) to (4). (7) Under this Division, all escrow accounts on monthly simple interest loans will be administered in the following manner: (a) The Director may require a cushion that shall be no greater than 1/6 of the estimated total annual disbursements from the escrow account. Estimated disbursements may be modified by an amount not exceeding the most recent year's change in the national Consumer Price Index (CPI) for all urban consumers (CPI, all items); (b) At the end of an escrow account computation year, an aggregate analysis will be completed on each escrow account to determine the borrower's escrow account payment(s) for the new payment year. The borrower will be notified of any shortage, deficiency, or surplus in the escrow account and the amount of escrow account payment to be included in the loan payment; (c) Except if a loan is two (2) months or more delinquent in payments, an analysis will not be done until the loan is brought current; (d) If the analysis determines there is not sufficient money in the escrow account to pay the required disbursements, the Director may advance the shortage/deficiency. The required escrow payments on the loan will be increased to recover any interest, fee or other advance by the Director for such a shortage or deficiency, or the borrower may repay the advance, interest or fee in a lump sum; (e) If the analysis determines there is a surplus in the escrow account equal to or greater than $25, the entire surplus shall be refunded to the borrower. If the surplus is less than $25, this amount will be retained in the escrow account and credited against the next year's escrow payments; (f) A statement itemizing all escrow account activity, (annual escrow analysis) will be provided to the borrower each year. (8) The following definitions apply to section (7) above: (a) "Aggregate analysis" means to analyze the escrow account by calculating the sufficiency of escrow funds as a whole, as opposed to calculating components separately. (b) "Cushion" means funds that the Director may require a borrower to pay into an escrow account to cover unanticipated disbursements or disbursements made before the borrower's payments are available in the account. (c) "Deficiency" means the amount of a negative balance in an escrow account. (d) "Escrow account" means any account that the Director establishes or controls on behalf of a borrower to pay taxes, insurance premium, or other charges, as applicable. (e) "Escrow account computation year" means a 12-month period that the Director establishes for the escrow account. (f) "Shortage" means an amount by which a current escrow account balance falls short of the target balance at the time of escrow analysis. (g) "Surplus" means an amount by which the current escrow account balance exceeds the target balance of the account. (h) "Target balance" means the estimated month end balance in an escrow account that is just sufficient to cover the remaining disbursements from the escrow account in the escrow account computation year, taking into account the remaining scheduled periodic payments, and a cushion. [Publications: Publications referenced are available from the agency.] Statutory/Other Authority: ORS 406.005 & 407.115 Statutes/Other Implemented: ORS 407.075 to 407.385; Oregon Constitution Article XI-A, Section 3 History: DVA 6-2020, amend filed 07/10/2020, effective 07/11/2020 DVA 1-2020, temporary amend filed 01/21/2020, effective 01/22/2020 through 07/10/2020 DVA 2-2005, f. & cert. ef. 4-22-05 DVA 2-2001, f. & cert. ef. 5-23-01