Interest on Escrow (“IOE”) in Wisconsin
On April 17, 2018, the state of Wisconsin passed Assembly Bill 822. Under the previous law, Wis. Stat. Ann. § 138.052, certain financial institutions and mortgage bankers who required an escrow account be established for either payment of taxes or insurance, were required to pay interest on the outstanding balance of the escrow account annually. Under the new law, these financial institutions that were required to pay under the previous legislation are no longer required to pay interest on escrow on a residential mortgage loan originating on or after April 18, 2018. We’ve attached a copy of the Wisconsin Assembly Bill 822 in full for your reference.
What does this mean for you?
· As a result of this legislation, Cenlar’s internal processes have been updated and we will no longer be requiring you to pay interest on escrow on escrowed loans which closed on or after April 18, 2018 in the state of Wisconsin. If you wish to continue paying interest on loans that would have been eligible under the previous legislature, please notify Cenlar as soon as possible. All requests should be made in writing to your Client Relationship Manager at your earliest convenience to ensure proper maintenance of your escrowed loans. Unless otherwise notified, Cenlar will not accrue or pay IOE on any loan closing on or after April 18, 2018 in the state of Wisconsin.
· All clients should take this new law into consideration when boarding both new and transferred loans. Please include the correct IOE flag of “0” (do not pay) or “1” (do pay) at the time of each loan boarding to minimize corrections needed after acquisition.
If Cenlar is not otherwise notified and if the IOE Flag is not identified at the time of loan boarding, it will be our standard policy to NOT pay IOE on any Wisconsin loan closing on or after April 18, 2018.
If you have any questions or concerns regarding the bill or this advisory, please contact your Relationship Manager directly.