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What is an escrow shortage?

April 26, 2017escrow shortage

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What is an escrow shortage?

2 Answers

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An escrow shortage occurs when there is an insufficient balance in your escrow account to meet your tax or insurance obligation when it becomes due.

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If the balance in your escrow account ever falls below the targeted reserve balance allowed, there is an escrow shortage. The shortage is divided by 12 and added to your payment for the next 12 months.