Section 48-7-8 - Mortgage escrow funds; limitation; credit against principal.
48-7-8. Mortgage escrow funds; limitation; credit against principal.
A. A monthly charge may be held in escrow by a mortgagee for the payment of taxes, insurance premiums and other charges required by the terms of a mortgage subject to the restrictions in Subsection B of this section.
B. Any balance in the escrow fund, exceeding two months' total escrow charges for future taxes, insurance premiums or other required charges, plus the pro rata accrual for such taxes, premiums and other charges, upon the demand of the mortgagor but not more than once each year, shall be credited to the principal amount of the mortgage as provided in Subsection B, or as provided by the contractual agreement, within sixty days of the demand.
C. Failure of a mortgagee to credit upon demand any excess accumulation of escrow funds as provided in Subsection B of this section shall cause [a] penalty at the rate of six percent per year to run on the amount of such excess accumulation of escrow funds which penalty shall be payable to the mortgagor.