Escrow analysis
An escrow analysis is the annual reconciliation a mortgage servicer performs on an escrow account. It compares what the account holds and what it will collect against what the coming year's property taxes and insurance premiums are expected to cost, then sets the new monthly escrow payment.
What the statement tells you#
Three things worth reading rather than filing.
The projected disbursements — what the servicer expects to pay out over the next twelve months, itemised. This is where you find out that your tax assessment rose or your insurer raised the premium.
The shortage or surplus — the gap between the projected requirement plus the allowed cushion and what the account will actually hold.
The new monthly payment, which takes effect on a stated date, usually with at least thirty days' notice.
Why it is worth checking rather than accepting#
The analysis is a projection, and projections carry whatever figures the servicer had on hand. Those figures can be wrong.
A successful property tax appeal that the servicer never learned about, a policy you replaced with cheaper coverage, an exemption newly applied to the parcel — any of these makes the projection too high, and the servicer will happily collect the larger amount for twelve months before discovering it.
Sending the corrected documentation and asking for a re-run is a normal request. Waiting a year for the next analysis to catch it is not.
The timing problem#
The analysis is retrospective. It discovers an increase that already happened, often months earlier, and then corrects for it in one step.
That is why the payment change is usually larger than the underlying increase warranted. The borrower is paying both the new higher rate and the accumulated gap from the months before anyone noticed.
Knowing when your servicer runs the analysis — it is on the same cycle every year — lets you see a change coming rather than receive it.
When the new payment is not affordable#
The analysis arrives with notice, which is the useful part — there is a window before the higher payment starts.
Three things are worth doing in that window. Check whether the projected tax figure reflects any exemption or classification the property qualifies for. Shop the insurance, since the premium is often the larger of the two increases and is the one you can actually change. And if the new payment still does not work, contact the servicer about loss mitigation before the first missed payment rather than after.
Servicers have far more options available for a borrower who is current than for one who is already behind.