May 11, 2021: Retained Servicing - Escrow Removal Request Procedure Has Been Updated

The procedure for Escrow Removal Requests for retained servicing loans has been updated.  

Key points from this updated procedure:

  • Generate the Escrow Removal Form in MSP to be mailed to customer
  • Advise customer to complete and sign the form and return the form to the Escrow Department for review
  • Escrow Department will review the request and determine if the loan qualifies for escrow removal
  • The Escrow Department will reply by mail to customer with approval or denial of escrow removal
  • Do not discuss removal criteria with customers – advise the Escrow Department will review customer’s loan and mail a written response

This procedure is viewable in KnowledgeOwl for Retained Servicing by navigating to: 

  • Home >> Account Maintenance >> Escrow Changes >> Escrow Removal
  • Or, type “Escrow removal” in the KnowledgeOwl for Retained Servicing search bar

Information from the job aid published in KnowledgeOwl is shown below.  Please contact your supervisor or manager if you have questions.  

Procedure and Job Aid:

If a customer calls requesting an escrow removal, complete the following steps:

  1. Send the Escrow Removal Form
    • Navigate to PL03 and send the CS020 letter. The mailroom will match this letter with the removal form and send it back to the customer.  The customer can return signed/completed form to the Correspondence Address - attention Escrow Department or the customer support email box.
  1. Advise the customer that the form will be reviewed by the Escrow Department for qualification and a decision will be sent back via mail. 

Note: Do not go over removal criteria, advise the customer to submit the form and Escrow will make the decision. We should not be approving or denying requests. 

Criteria to Remove Escrow Account: The below is the checklist is used by the Escrow Department when reviewing requests to remove an escrow account.


Borrower Name: 

Loan Number: 

Eligibility Requirements

Does Loan Meet Criteria?

The terms of your mortgage loan and applicable law must allow for an escrow waiver

You must NOT have completed a prior mortgage loan modification

You CANNOT remove flood insurance from escrow if your mortgage loan was originated, increased, renewed, or extended on or after January 1, 2016 and your property is located in a designated Special Flood Hazard Zone Area

You must have had your mortgage loan for 5 years if your loan is a high price or higher priced mortgage loan

You must NOT have been previously approved for an escrow waiver and failed to make all payments timely, as required

You must have a good payment history.  A good payment history means: No payments were made 30 days or more past due in the last 12 months, and No payments were made 60 days or more past due in the last 24 months

You must have had your mortgage for at least 6 months from the date of origination or the completion of a repayment plan
  ***Fannie Mae DOES NOT require a loan to be aged a minimum of 6 months in order to proceed with Escrow Removal***

Your Principal balance for the mortgage loan must be less than 80% of the original appraised value

Your loan CANNOT have any type of mortgage insurance that is paid from the escrow account

Your loan CANNOT be insured by the Federal Housing Administration (FHA)

Your loan CANNOT be a USDA (RHS) loan.

Your loan CANNOT be HomeOneSM Mortgage

The property cannot be a manufactured home

If the loan is FHLMC, the property cannot be 2-4 unit

**If loan does not meet ALL of these items, loan CANNOT be approved for Escrow Removal**

Fannie Mae states it must be less than 80% (not equal to)

Freddie Mac does not allow removal on a MH or 2-4 unit, 

Fannie Mae does not allow removal on a MH