FOND DU LAC, Wis.–Are all credit unions ready to manage a growing demand for escrow accounts and the “complexities” that can come with them?
Info-Pro Lender Services isn’t certain, citing how the Great Recession has led to a growth in escrow accounts.
“As our economy continues to recover from the shifting economic conditions over the last eight years, we have seen a trend among financial institutions to increase the number of borrowers required to have an escrow account,” said Chad Raube, Info-Pro Lender Services president and CEO.
Raube said there simply are a number of factors that now contribute to even further growth of escrow accounts.
“With a rejuvenated economy, healthy housing market, low interest rates, improving equity positions in homes, and Millennials entering the home buying market, more people are seeking mortgages and, in turn, escrow accounts. This increase in escrow accounts brings additional challenges for credit unions,” he said.
Manage Complexity
While requiring a borrower to use an escrow account reduces risk for a credit union, there are complexities that come with managing those accounts, which Raube said can sometimes “overwhelm” the credit union.
Chad Raube
“When a borrower uses an escrow account, responsibility for disbursing the funds, and in many cases paying the home’s taxes, shifts to the credit union,” noted Raube. “Ensuring all those taxes are paid, on time to the right person, entity or agency, is a significant undertaking—not to mention also navigating through the various regulations the credit union must comply with. So this becomes almost a double-edged sword—using the escrow account reduces risk for the institution but also greatly increases responsibility for getting those taxes paid.”
Raube said that many financial institutions are turning to companies, like Info-Pro, to outsource escrow management.
Raube said tax service organizations, like Info-Pro, can provide services and solutions that take the escrow management burden off credit unions, including:
- Obtaining tax amounts 30-45 days before the due date
- Electronic processing when it is available
- Providing payment instructions for non-automated agencies
- Gathering tax bills
“Over the past few years we have seen an increase in escrow accounts by our customers and expect this trend to increase even more over the coming years,” said Raube. “Info-Pro has a great deal of expertise in this area, and our credit union customers know they are receiving the best escrow processing assistance in the industry.”