What is the disbursement date for paying escrow account items?
The disbursement date means the date on which the lender actually pays an escrow item from the escrow account. However, the lender must pay the items in a timely manner, that is, on or before the deadline to avoid a penalty. This is required as long as the borrower’s payment is not more than 30 days overdue. Borrowers should review their annual escrow statement to make certain the lender did not make late payments and charge any penalties to the borrower’s account.
The rule states that the disbursement date for an escrow account item is a date on or before the earlier of either a deadline to take advantage of discounts, if available, or the deadline to avoid a penalty. [24 CFR 3500.17 (b)] The consumer and servicer in some cases may agree to an even earlier date than would normally be necessary to deliver the payment on time, if there are good reasons, such as letting the consumer get a federal income tax deduction.
