24 C.F.R. § 203.23

Mortgagor's payments to include other charges

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(a) The mortgage shall provide for such equal monthly payments by the mortgagor to the mortgagee as will amortize:

(1) The ground rents, if any;

(2) The estimated amount of all taxes;

(3) Special assessments, if any;

(4) Flood insurance premiums, if flood insurance is required by the Commissioner; and

(5) Fire and other hazard insurance premiums, if any. The mortgage shall further provide that such payments shall be held by the mortgagee in a manner satisfactory to the Commissioner for the purpose of paying such ground rents, taxes, assessments, and insurance premiums before the same become delinquent, for the benefit and account of the mortgagor. The mortgage must also make provisions for adjustments in case the estimated amount of such taxes, assessments, and insurance premiums shall prove to be more, or less, than the actual amount thereof so paid by the mortgagor. Such payments shall be held in an escrow subject to § 203.550.

(b) The mortgagor shall not be required to pay premiums for fire or other hazard insurance which protects only the interests of the mortgagee, or for life or disability income insurance, or fees charged for obtaining information necessary for the payment of property taxes. The foregoing does not apply to charges made or penalties exacted by the taxing authority, except that a penalty assessed or interest charged by a taxing authority for failure to timely pay taxes or assessments shall not be charged by the mortgagee to the mortgagor if the mortgagee had sufficient funds in escrow for the account of the mortgagor to pay such taxes or assessments prior to the date on which penalty or interest charges are imposed.

(c) Mortgages involving a principal obligation not in excess of $9,000 may contain a provision requiring the mortgagor to pay to the mortgagee an annual service charge at such rate as may be agreed upon between the mortgagee and the mortgagor, but in no case shall such service charge exceed one-half of one percent per annum. Any such service charge shall be payable in monthly installments on the principal then outstanding. The provisions of this paragraph shall not apply to mortgages endorsed for insurance pursuant to applications received by the Commissioner on or after July 17, 1961.

[36 FR 24508, Dec. 22, 1971, as amended at 37 FR 25231, Nov. 29, 1972; 41 FR 47934, Nov. 10, 1976; 59 FR 53901, Oct. 26, 1994]

Notes of Decisions

Cited in 3 cases, 1971–1980 · leading case: Gibson v. First Fed. Sav. & Loan Ass'n, 364 F. Supp. 614 (E.D. Mich. 1973).

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Gibson v. First Fed. Sav. & Loan Ass'n, 364 F. Supp. 614 (E.D. Mich. 1973). · cites it 2× “24 C.F.R. § 203.23 (a). Plaintiffs do not contest the authority of First Federal to collect the monthly escrow amount.”

Madsen v. Prudential Fed. Sav. & Loan Ass'n, 635 F.2d 797 (10th Cir. 1980). “17 , and because the mortgage must provide for monthly escrow payments for taxes and insurance, see 24 C.F.R. § 203.23 (a). However, these regulations are silent on the issue of interest payments on escrow accounts, and therefore do not conflict with section 545.”

(1971), 60 Op. Att'y Gen. 514 (Wis. Att'y Gen. 1971). “24 CFR 203.23 . A parallel obligation is imposed upon the Federal National Mortgage Association, as well as others, with respect to mortgages guaranteed by the Veterans Administration.”

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