Escrow System Improvement Act

Escrow System Improvement Act - Requires the establishment of an escrow services plan in connection with any federally related mortgage loan if, at the time the loan is made or at any time thereafter, either the borrower of the lender requests it, and after being established any such plan shall continue in effect until the borrower has fully discharged his obligation under the laon.

Requires that the contract of sale, deed or trust, or other appropriate document executed in connection with any federally related mortgage loan shall include a covenant fully informing the borrower of his right: (1) to have an escrow service plan established upon his request in connection with such loan as provided under this Act; and (2) to terminate any such plan under and in accordance with this Act.

Provides that, within sixty days after the effective date of this of this Act, the lender under any federally related mortgage loan made before the effective date of this Act shall, in accordance with regulations prescribed by the Secretary, provide to any borrower under such a loan a written notice: (1) of his right under this section to request the establishment of an escrow services plan; and (2) describing the advantages to the borrower of an escrow services plan.

Provides that if the borrower under any federally related mortgage loan with respect to which there was established an escrow account requests the establishment of an escrow services plan under this Act, the escrow account shall be terminated upon the establishment of the escrow services plan and the balance in such account shall be treated as payments made under the escrow services plan.

Requires that whenever the borrower in connection with a federally related mortgage loan has acquired an equity of at least 20 percent in the property covered by such loan: (1) the lender shall no longer have the right to require the establishment of an escrow services plan in connection with such loan; and (2) the borrower shall have the right to terminate any escrow services plan theretofore established in connection with such loan under this Act.

Provides that payments of taxes and insurance premiums by the lender under any escrow services plan established in connection with a federally-related mortgage loan shall be made at such times and in such manner as will insure that the borrower receives the maximum benefit of any discounts and other financial consideration which may be allowed or provided for in the jurisdictionwhere the property which secures such loan is located.