Handling Multiple Escrow Disbursements

When a single escrow item (such as real estate taxes) disburses multiple times per year, it can result in multiple EscrowAdd requests being sent. This tutorial explains why multiple requests are generated, how PITI (Principal Interest Taxes Insurance) should be handled, and how to correctly map escrow items with multiple disbursements.

Problem Summary

A loan has one escrow item, but the item is disbursed twice per year. When the loan is sent to Jack Henry:

• Two EscrowAdd requests are generated—one for each disbursement.
• Jack Henry appears to be adding the escrow payment twice in the PITI calculation.
• The bank needs clarity on how to correctly model and map multi‑disbursement escrow items.

Key Questions

Should a single escrow item generate multiple EscrowAdd requests when it disburses multiple times?

Yes. Escrow items that disburse more than once per year must be represented as separate distributions if the distribution schedule cannot be expressed as a uniform frequency.

Examples:

If an item’s schedule cannot be expressed mathematically, Jack Henry requires multiple EscrowAdd requests, one per distribution frequency.

How should the PITI amount be handled to prevent double‑counting?

If an escrow item disburses twice per year, each distribution must not contain the full yearly escrow amount.

What could cause the issue:

• The original implementation sent EscrwPmtAmt for both disbursements at the full amount, causing Jack Henry to double the escrow portion of PITI.

Correct approach:

• Compute the total monthly escrow amount for the item.
• Divide it based on the number of yearly disbursements.
• Send EscrwPmtAmt for each EscrowAddRequest as:

EscrwPmtAmt = (Total yearly escrow amount / 12) ÷ Number of disbursements

Example: If the escrow requires $574.08 per year and disburses twice:

• Monthly escrow = 574.08 / 12 = $47.84
• Amount per disbursement schedule = 47.84 / 2 = $23.92
• EscrowAdd request P1: EscrwPmtAmt = 23.92
• EscrowAdd request P2: EscrwPmtAmt = 23.92

This ensures Jack Henry calculates the correct PITI, with the escrow amount included only once.

If we should NOT generate multiple requests, how would multiple disbursements be handled?

If the escrow item’s disbursement pattern fits a consistent term + term unit, then:

• Use one EscrowAdd request
• Set the schedule fields (Term, TermUnits) so that the core automatically rolls disbursement dates correctly.

However:

• If the schedule skips around irregularly (e.g., month 3 → month 5 → month 12), you cannot express this in a single distribution, and multiple EscrowAdd requests are required.

Final Guidance

When an escrow item disburses multiple times per year:

• Send multiple EscrowAdd requests when the distribution pattern cannot fit a uniform schedule
• Divide the escrow monthly amount across requests so PITI includes the correct value
• Ensure each EscrowAddRequest has a correct EscrwTypeCode (e.g., P1, P2)
• Validate that EscrwPmtAmt does not contain the full amount in each request

If mismatched or duplicated EscrwPmtAmt values appear, Jack Henry will double-count escrow and inflate PITI.