This might also depend on your contract with the customer, but we believe that the standard practice is to simply reimburse any overages. There are no laws that specifically govern how overages should be handled or that would prohibit the bank from applying overages to the balance of the loan.

The Illinois Mortgage Tax Escrow Act (which, as we have discussed, would apply to escrow accounts for business-purpose loans made to purchase single-family residences) limits the agreement from requiring more than 150% of the last year’s property taxes on the property (except in the first year of the loan). 765 ILCS 915/1. Otherwise, we are not aware of any laws governing how overages are handled on commercial escrow accounts, as Regulation Z’s requirements would not apply (24 CFR 3500.5(b)(2)).