While we agree that Regulation X prohibits charging fees for preparing and distributing escrow account statements, we believe it is permissible to charge an initial escrow set up fee, provided that it is unrelated to the preparation and distribution of the initial escrow account statement.

Section 12 of Regulation X prohibits escrow account fees for “the preparation and distribution of . . . escrow account statements required pursuant to section 10 of RESPA.” 12 CFR 1024.12. Section 10 of RESPA requires an initial escrow account statement and annual statements. 12 USC 2609(c). When these sections are read together, it is clear that a bank cannot charge a fee for an escrow account's initial statement, but we do not see how they preclude charging a fee for setting up the escrow account.

Having said that, we recommend documenting the services provided for setting up the escrow account if a setup fee is charged, due both to RESPA's prohibition on unearned fees and to the CFPB's focus on unfair, deceptive and abusive acts and practices (UDAAP).