Escrow analysis is the servicer's review of the escrow account to determine whether projected taxes and insurance collections are sufficient.
Escrow analysis is the servicer’s review of the Escrow Account to determine whether projected taxes and insurance collections are sufficient.
Escrow analysis matters because it is one of the main reasons a monthly mortgage payment can change even when the note rate and scheduled principal-and-interest payment do not.
It also matters because borrowers often interpret escrow changes as arbitrary. In reality, the servicer is reviewing projected property taxes, insurance premiums, and account balances to see whether the escrow setup still works.
Borrowers encounter escrow analysis after closing, once the loan is in servicing and the account has enough payment history for periodic review.
The term becomes especially practical when the servicer issues a notice showing a new payment amount, an Escrow Shortage, or an Escrow Surplus.
A homeowner receives an annual escrow review showing that taxes rose and the account balance is no longer enough to cover future bills. That review is the escrow analysis.
Escrow analysis differs from Escrow Account because the escrow account is the actual bucket of funds, while the analysis is the review process used to recalculate whether that bucket is being funded appropriately.
It also differs from Escrow Shortage and Escrow Surplus. Those are possible results of the analysis, not the analysis itself.