Advancing Escrow for NPNs
This is similar to another post about advancing property taxes for NPNs with a few differences.
We will make advances for escrow accounts for owner occupied loans, in which the borrower may file Ch 13 Bankruptcy. Keeping the escrow account active makes it a lot easier to collect your advances in a BK.
The servicer will do an escrow analysis once a year and include any escrow shortages which you advanced. As the borrower makes payments, the servicer will refund you the advances that you made out of the escrow account.
If the account is not escrowed, you have to do a lot of work to get the borrower to pay for property taxes and insurance if they're not doing so on their own.