Currently mortgage lenders are not required to pay interest on mortgagees funds held in escrow for payment of real estate taxes and homeowners insurance. The lenders hold the funds almost all year since taxes and insurance are paid on an annual basis. In addition to the annual amount for taxes and insurance the lenders also hold a cushion of so many months worth taxes and insurance. The states regulate how much of a cushion the lenders can hold but do not require the lenders to pay interest. The federal government needs to uniformly regulate the lenders on their escrow practices and make them treat consumers fairly by paying them interest or allow them to pay their own taxes and insurance.
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