If a mortgage loan is charged off, am I still required to provide the borrower with a Regulation Z escrow closing notice if I close his or her escrow account? The account is just a typical escrow for taxes and insurance and was not set up as the result of the customer’s delinquency.
Yes—a charged-off debt is not extinguished and is still the borrower’s obligation, so in the event you terminate the borrower’s escrow account, you still must send them the escrow closing notice as required by 12 CFR §1026.20(e) of Regulation Z, unless their obligation to pay the loan back was completely extinguished beforehand.
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