Escrow-Free Loans Raise Credit-Risk Questions
Miami Herald, July 30, 2018–Kenneth R. Harney
Traditionally, borrowers granted waivers from mandatory escrow accounts have had good to excellent credit scores and substantial down payments–often 20 percent or more. Opening the door to escrow-free status for borrowers who don’t fit this profile is raising eyebrows in the mortgage field. Michael Fratantoni, chief economist for the Mortgage Bankers Association, said it would be “a troubling development” if large numbers of new buyers with sub-par credit opted out of escrow accounts, exposing them to potential problems down the road.
