Escrow Accounts - Loans, Deposits, or Liabilities ???

In the current economic climate, more banks have decided to retain mortgage loans on the bank’s books rather than originating them and selling them shortly thereafter. Many mortgage loans have a requirement for escrow. The question then arises about how to handle escrow accounts for Call Report purposes. 

 Let’s first think about some definitions:

 Escrow-Funds held by the bank for the ultimate benefit of a person, or most likely, a taxing authority or insurance company. 

 Deposit-The Call Report documentation generally describes a deposit as “money held for others.”  Further, 12.CFR Part 204.2(a)(1)(ii) defines deposits as “Money received or held by a depository institution, or the credit given for money or its equivalent received or held by the depository institution in the usual course of business for a special or specific purpose, regardless of the legal relationships established thereby, including escrow funds.”

 With that said, funds held in escrow accounts must be reported on Call Report Deposit Schedule (RC-E) on the appropriate line for the type of deposit account category in which they are carried.  Reporting escrow accounts correctly on Call Reports also helps ensure that the bank is reporting accurate deposit information on other regulatory reports and allows the bank to pay the correct FDIC assessment. 

 Without a doubt, to remain current, Call Report preparers need consistent training and support. 3PR Call Report Resources provides the training you want along with coaching and answers to puzzling questions that you need. 

 Have a good day!

 Harold

February, 2022