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Does the Illinois Mortgage Escrow Account act apply to escrow accounts set up to pay private mortgage insurance (PMI), or does it apply only to real estate tax escrow accounts? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

Does the Illinois Mortgage Escrow Account act apply to escrow accounts set up to pay private mortgage insurance (PMI), or does it apply only to real estate tax escrow accounts?

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We believe that the Mortgage Escrow Account Act applies only to escrow accounts that hold funds for purposes of paying property taxes. If an escrow account holds funds only for purposes of paying PMI premiums, we do not believe that the Act would apply. But if an escrow account holds funds for purposes of paying both property taxes and PMI premiums, then the Act would apply.

For resources related to our guidance, please see:

  • Mortgage Escrow Account Act, 765 ILCS 910/2(a) (“‘Escrow account’ means any account established by the mortgage lender in conjunction with a mortgage loan on a residence, into which the borrower is required to make regular periodic payments and out of which the lender pays the taxes on the property covered by the mortgage.”)