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f there is a surplus in the escrow account and the borrower is in default, may the servicer retain the surplus as payment towards the amount in default?

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HUD’s escrow rules are inapplicable to loans that are in default, which is defined under the RESPA rules as current payments which are more than 30 days delinquent. The parties should consult the mortgage documents or state law to resolve whether escrow funds are available for this purpose.

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