What does Section 10 of RESPA set limits on?

Section 10 of the Real Estate Settlement Procedures Act (RESPA) specifically addresses the requirements surrounding escrow accounts, particularly concerning the contributions that can be made by borrowers. This section establishes limits on the amount of money that lenders can require borrowers to deposit into escrow accounts for property taxes, insurance, and other related expenses.

The rationale behind setting these limits is to protect consumers from being overcharged for the amounts held in escrow. Lenders are required to provide an annual statement regarding the escrow account that details the amount deposited, the disbursements made, and the balance remaining, ensuring transparency in how these funds are managed.

By controlling the contributions, Section 10 prevents lenders from demanding excessive amounts that could strain a borrower's financial situation, allowing for a more fair and reasonable loan management process. This focus on borrower protection is a key principle of RESPA, aiming to promote transparency and fairness in the mortgage lending process.