Escrow Account Update
The first area checked for escrow account questions was the RESPA (Real Estate Settlement and Procedures Act) FAQ section of the Department of Housing and Developement website. Section 10 deals with escrow accounts. What we find here is the recommendation that if taxes and insurance are not paid by your lender, the government suggests that you hire an attorney.
Contact was made with Rick Tangum of The Georgia Department of Banking and Finance. While he did not think that there was reason to be overly concerned Mr. Tangum did offer a suggestion. If you are concerned about your lender paying your taxes and insurance you can request that the escrow account be cancelled and assume the responsibility yourself. This would be a viable alternative provided that you have met the proper equity percentage required by FHA, Fannie Mae or Freedie Mac; depending on which entity regulated your mortgage to start with.
What we can deduct from all of this is that your escrow account is not insured no matter how solvent or insolvent your mortgage company is.
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