CRAM ARCADE Open App

When a loan servicing transfer occurs, what happens to the borrower's existing escrow account balance?

Federal Mortgage Law · 24% of the SAFE exammedium

Show the answer and explanation

Correct answer: The entire escrow balance transfers to the new servicer, who must honor existing escrow obligations

The escrow balance transfers automatically with the loan. The new servicer assumes the full balance and must continue honoring the original escrow schedule — paying property taxes, insurance premiums, and any other escrowed obligations on time. The borrower should experience zero interruption in escrow services. If the new servicer mishandles the escrow (e.g., misses a tax payment), the new servicer is liable, not the borrower.

Drill 2,078 more questions like this, free

CRAM ARCADE has the full NMLS question bank, timed practice exams, focus drills on your weakest category, flashcards and spaced repetition. No credit card.

Start studying free