How to Read Your Escrow Statement

Your Annual Escrow Statement & What It Means

If you have an escrow account with Ditech, this guide will help you understand your Annual Escrow Account Disclosure Statement. An escrow account is an account Ditech sets up to pay certain bills associated with your property, such as property taxes, homeowners insurance, hazard/flood insurance or private mortgage insurance (PMI), if required. That way, you don't need to save for these expenses or keep track of due dates. We make these payments for you on time, as needed, from your escrow account. 

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Section 1: Why am I receiving this statement?


Ditech Escrow Account Disclosure Statement, page 1, example of an escrow shortageThis section highlights key information regarding your recent escrow review. We let you know whether your escrow account has a surplus or a shortage. We also let you know what your new monthly mortgage payment will be and what date your new payment takes effect. If you have a shortage, this section highlights the options you have for paying that shortage. If you have a surplus of $50.00 or more, you will typically have a refund check attached to the bottom of the statement.  If not, this section will explain what is happening to that surplus.  
 

Section 2: Why are my payments changing?


This section describes the changes to your monthly mortgage payment, due to changes in your escrow payment.  This section shows both your current payment amount and your new payment amount This section also shows you the components of your new escrow payment based on the most recent information we have about  your  annual taxes, hazard insurance and private mortgage insurance payments. These amounts are used to estimate required outgoing payments for the next 12 months. The total outgoing payments is divided by 12 to determine your new monthly escrow payment. If you have a shortage, you see two options for paying it. Option 1 shows you how much your new payment will be if you pay your shortage immediately.  Option 2 shows you how much your new payment will be if you decide to spread your shortage over The extra shortage amount listed under option 2 shows how spreading your shortage out affects your monthly payment. If you have a surplus, this amount is typically returned to you and does not affect your new mortgage payment. If your surplus is less than $50.00, that surplus is used to decrease your monthly mortgage payment until you reach your minimum balance. You may see two slightly different payment amounts with the effective date for each.
 

Section 3: What do I need to do?


This section explains what actions you need to take, if any, based on the information provided.  Specific actions are included to pay your shortage. The escrow shortage coupon should be included with your shortage check or money order. If you have a surplus, you will most likely have a refund check attached to the bottom of this statement. In some cases, a check will be mailed separately.

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Section 4: How is my escrow shortage/surplus calculated?


Click to enlarge: Ditech Escrow Analysis Disclosure Statement, page 2, example of an escrow shortage This section shows you how we calculated your escrow shortage or surplus. Your expected payments in and out of your account are projected over the next 12 months. We then compare the lowest projected balance to the minimum balance that must be maintained in your account.
  • If the lowest balance projected ever falls below the minimum balance that must be maintained in your account, you have a shortage.
  • If the lowest balance projected is greater than the minimum balance that must be maintained in your account, you have a surplus.
Minimum Escrow Balance: The minimum balance ensures that your escrow account will have enough funds available so we can make all required payments throughout the year. We use your previous tax and homeowner’s insurance bills to estimate future payments. Private Mortgage Insurance (PMI) payments are not included in the minimum balance.
 

Section 5: What happened since my last escrow review?


This section shows you how much money you paid into your escrow account and how much we actually paid out since your last escrow review. We also include what we expected you to pay to escrow and what we expected to pay out. Any differences between what we expected to pay out and what we actually paid out could impact whether you have a shortage or a surplus in your escrow account.
  • If what we actually paid out is more than what we expected to pay out, you may have a shortage.
  • If what we actually paid is less than expected, you may have a surplus.
For more information about escrow visit Understanding Escrow.
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