A Helpful Guide to Understanding Your
Annual Escrow Account Disclosure Statement
What is the Annual Escrow Account Disclosure Statement?
An escrow account is generally required and controlled by a financial institution to help the homeowner
budget on a monthly basis the additional expenses associated with owning a home. These expenses may
include property taxes, homeowners/hazard insurance, private mortgage insurance (PMI), etc. The Annual
Escrow Disclosure Statement is a review of your escrow account based on actual amounts paid into and
disbursed from the account over the past year. It also provides an estimate of amounts required in the coming
year based on the past year’s transaction history.
Page 1
1.Current Payment Information:
This section shows your current total
monthly mortgage payment with a breakdown
showing amounts paid toward principal and
interest, escrow and other expenses.
2.New Payment Information:
If applicable, this section shows your new
total monthly mortgage payment along with
the effective date that the new monthly
mortgage payment amount is first due, and
a breakdown showing amounts paid toward
principal and interest, escrow and other
expenses.
3.Account History:
This section shows monthly transaction
details of payments to and disbursements
from your escrow account over the past 12
months.
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4.Payments to Escrow:
This column shows your payments into the
escrow account.
5.Payments from Escrow:
This column shows the payments from
(out of) your escrow account.
6.Description:
This column describes the expenses paid out
of your escrow account.
7.Escrow Balance:
This column provides a monthly running
balance after each transaction.
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8.Copy Of Last Year Escrow Projection
This section restates the prior year’s
projection for escrow account activity.
HTR-0004 (09/16)
Page 2
9. Current Year Escrow Projection:
This section contains a projection of escrow
activity for the coming year. Projections
include monthly payments into the escrow
account and expense disbursements out
of the account based on last year’s activity.
Please note that if Property Taxes rise or
Insurance Premiums increase during the
year, there may be a shortfall in the escrow
account that will need to be made up the
following year.
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10. (RLP) Your Required Low Point
Balance:
The low-point equals the lowest monthly
escrow balance during the 12-month
projection. An escrow balance is projected
for a 12-month period, assuming that Central
Pacific Bank receives scheduled payments
and makes scheduled disbursements (pay
property taxes, insurance premiums, etc.).
11. Your Beginning Balance:
This is the estimated beginning balance for
your Escrow Account in the coming year.
12. Your Ending History Balance:
This is the ending balance in your escrow
account at the end of the past 12 months.
13. Surplus or Shortage:
The difference between your Beginning
Balance (#11) and your Ending History
Balance (#12) is the Surplus or Shortage.
Surplus amounts $50.00 and over are
refunded to the borrower while surplus
amounts under $50.00 are returned to the
borrower by lowering the monthly escrow
payment due. Shortages are divided by 12
months and added to the monthly escrow
payment due. Example:
$154.74 ($1,856.96 ÷ 12 months)
+$629.97 (monthly escrow payment due)
$784.71 (your new escrow payment)
14. Your New Escrow Payment: This
is your new monthly escrow payment
and includes any surplus or shortage as
determined above. It is also equal to the
escrow amount shown in #2 on Page 1.
15. Cushion Selected By Servicer:
Based on federal law, lenders may require
a cushion of up to two months or 1/6th of
the annual escrow disbursements. The
actual cushion used by CPB may be lower.
The cushion helps to cover any unexpected
changes in the flow of funds in the escrow
account. Examples include an increase in
property taxes or insurance premiums.
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Frequently Asked Questions
On Escrow Accounts
Q: What is an Escrow Account?
A: It is a special account that protects both you and
Central Pacific Bank by assuring that the following
types of payments are made on time:
•Real estate taxes paid to taxing authorities
•Homeowner’s insurance
•Catastrophe insurance (Hurricane, Flood, etc.)
Q: What is an Escrow Analysis?
A: An escrow analysis is an annual accounting of the
amounts put into and paid out of your escrow account.
This review identifies if there is too much (surplus)
or too little (shortage) money in your account. The
Annual Escrow Account Statement we send to you is
the result of our analysis. Please note that the escrow
account does not include the collection of funds for
supplemental or special tax assessments.
Q: How is the lowest projected balance point
determined?
A: The low-point equals the lowest monthly escrow
balance during the 12-month projection. An escrow
balance is projected for a 12-month period, assuming
that Central Pacific Bank receives regular payments
and makes regularly scheduled disbursements.
Mortgage insurance (MIP or PMI) is not included in
the required low-point calculation.
Q: What is an escrow account projection?
A: Also titled Current Year Escrow Projection on your
statement, this shows an estimate of deposits and
payments including the possible due date and
an estimated account balance each month. The
projection section of the Annual Escrow Account
Disclosure Statement has messages about overages
and shortages, plus a summary of the new monthly
payment amount.
Q: Why did my monthly escrow payment amount
increase?
A: The monthly escrow payment amount may increase
because the actual balance in your escrow account is
less than the amount of funds needed to pay your tax
and insurance bills. This can occur as a result of:
• An increase in tax or insurance bills
• Actual deposit or payment from escrow is different
from a previous estimate
• Tax reassessment on new construction
Q:What is a cushion?
A: An escrow cushion is a portion of your monthly
mortgage payment that is set aside as an additional
safeguard to cover unanticipated disbursements
such as increases in property taxes or insurance
premiums. The maximum allowable cushion is equal
to two months or one-sixth of the annual escrow
disbursements.
Q:If I choose to pay my entire shortage in full, where
do I send it?
A: Please write a check payable to Central Pacific Bank
with “Escrow Shortage Payment” in the memo/note
section, include your loan number, borrower name
and address, and mail to:
Central Pacific Bank
Attention: LOD-Escrow
PO Box 3590
Honolulu, HI 96811-3590
Q:Will my payment amount remain the same if I pay
my shortage in full?
A: Not necessarily. If you pay your shortage in full,
Central Pacific Bank will recalculate your payment
to reflect 1/12 of your total projected disbursements.
Paying your shortage in full will minimize your
payment increase. Your payment amount may still
change if your tax or insurance amount increased in
the last year.
If your total monthly payment is increasing, please
read this important information:
Increases in your monthly mortgage payment amount
as a result of an escrow analysis are usually due to
increases in the property taxes and/or homeowner’s
insurance premiums. If you have questions about
an increase in your property taxes or homeowner’s
insurance premiums, please contact your local taxing
authority or insurance agent. They are the best source to
explain the increases.
(09/16)