32-10-309. Escrow funds -- trust funds -- reserves. (1) Escrow funds, trust funds, or reserves authorized for any purpose by the mortgage loan contract are subject to all applicable state and federal requirements, must be immediately placed and maintained in separate accounts in a federally insured financial institution having an office in this state, and may not be commingled with any licensee funds.
     (2) An escrow fund or reserves account must be placed in a segregated account with a federally insured financial institution having an office in this state. The funds must be kept in the segregated account until disbursement. The escrow funds or reserves account may be used only for:
     (a) payments authorized by the borrower, allowed by the mortgage loan contract, or required by federal or state law;
     (b) refunds to the borrower;
     (c) transfer to another federally insured financial institution having an office in this state;
     (d) forwarding to the appropriate mortgage lender or mortgage servicer in case of a transfer of servicing;
     (e) any other purpose authorized by the mortgage loan contract; or
     (f) compliance with a department or court order.
     (3) All accounting for escrow funds or reserves must be performed in compliance with the aggregate accounting rules established in regulation X, 24 CFR 3500.
     (4) A trust fund account must be placed in a segregated account with a federally insured financial institution having an office in this state. The funds must be kept in the segregated account until disbursement. Trust funds may be removed from the trust fund account and used only for:
     (a) payments authorized by the borrower to pay for third-party services required for origination of the mortgage loan;
     (b) refunds to the borrower;
     (c) transfer to another financial institution or mortgage lender; or
     (d) compliance with a department or court order.
     (5) The requirement of keeping the escrow funds, trust funds, or reserves in accounts in a financial institution having an office in this state may be waived by the department by rule.

     History: En. Sec. 14, Ch. 369, L. 2007.