Wis. Stat. Ann. § 138.052 sets forth escrow account requirements for primary lien mortgages secured by a 1-to-4 family dwelling, which is used by the borrower as his or her residence.
Subsection (5m) of such section in particular describes the methods by which a borrower can request and authorize an escrow agent (i.e. a person who receives escrow payments on behalf of itself or another person) to pay property taxes through an escrow account by certain methods. For example:
1. Requesting that the escrow agent send to the borrower, by December 20th of each year, a check payable to the borrower and the municipality authorized to collect taxes, so that the borrower can pay the taxes directly;
2. Requesting the escrow agent to directly pay the property taxes by December 31st of each year (if a tax statement for the property is received by the agent by December 20th); or
3. Requesting the escrow agent to pay property taxes when they become due.
Certain responsibilities are placed on escrow agents and borrowers under Subsection (5m). In order to elect one of these methods of payments, the borrower must send his election to the agent by November 1st. If the borrower chooses to have checks sent to him, he must send to his servicer a copy of the receipt for paying the property taxes. Should he fail to do so, he may no longer receive checks in such manner until the next year (at the earliest).
Subsection (5m)(b) requires a borrower to be provided a written notice, before loan closing, which clearly states both the manner of payments the borrower can request of the escrow agent and the borrower’s and agent’s responsibilities.
We have been providing Cx1023 for this notice requirement in Closing document packages, in order to help ensure that our clients who do not utilize our Initial Disclosure packages have a chance to provide this notice before a loan closing, if they have not provided such notice beforehand.
Recognizing both the need to provide this document before closings for client who do utilize our Initial Disclosure packages and for those who do not, we will be re-configuring Cx1023 to print both in Initial Disclosure and Closing packages.
The content of Cx1023 will be slightly different depending on which package it prints in. The version printing in Initial Disclosures will be an actual notice, whereas the one that prints in Closings will enable the borrower to elect the method of payment he desires.
We will also be making grammatical changes and streamlining the text of the document to make it easier to read.
These changes will take effect on July 17, 2013. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
July 11, 2013