Federal Mortgage Law · 24% of the SAFE exameasy
Correct answer: 2 months of the annual escrow disbursement (one-sixth of the annual total)
The maximum cushion is 2 months (one-sixth) of the estimated total annual escrow disbursements. This means if total annual taxes + insurance = $4,800, the monthly escrow = $400, and the max cushion = 2 × $400 = $800. The servicer cannot require more than this as a reserve. This RESPA Section 10 rule protects borrowers from excessive escrow collection.
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