(a) In no event shall interest be required to be paid on escrow accounts where (1) there is a contract between the mortgagor and the mortgagee, entered into before October 1, 1975, which contains an express disclaimer of an obligation on the part of the mortgagee to pay interest on the accounts, (2) the payment of such interest would violate any federal law or regulation, (3) the accounts are maintained with a mortgage servicer, neither affiliated with nor owned in whole or in part by the mortgagee, under a written contract or any mortgage agreements underlying the contracts, entered into before October 1, 1975, which contract does not permit the mortgage servicer to earn or receive a return from the investment of the accounts, or (4) the accounts are maintained in connection with mortgage loans entered into (A) on and after October 1, 1977, and before January 1, 1989, and which are serviced and held for sale for not more than one year by a mortgage servicer, neither affiliated with nor owned in whole or in part by the purchaser of the mortgage loan, and (B) on and after January 1, 1989, and which are serviced and held for sale for not more than six months by any such mortgage servicer, provided such mortgage servicer shall pay interest on an escrow account maintained in connection with such mortgage loan if the loan is sold within such specified periods and the mortgage servicer continues to service the loan.

(b) In no event shall interest be required to be paid at a rate in excess of two per cent per annum where (1) there is a contract between the mortgagor and the mortgagee entered into before October 1, 1977, which contains an express agreement to pay interest at the rate of two per cent per annum, or (2) such accounts are maintained in connection with mortgage loans entered into prior to October 1, 1977, and which are serviced and held for sale for not more than one year by a mortgage servicer, neither affiliated with nor owned in whole or in part by the purchaser of the mortgage loan.

(P.A. 75-385, S. 2; P.A. 77-355, S. 2; P.A. 78-23; P.A. 79-602, S. 85; P.A. 88-271, S. 2, 3; P.A. 14-89, S. 24.)

History: P.A. 77-355 added Subdiv. (4) re accounts maintained in connection with mortgage loans entered into on and after October 1, 1977, and added Subsec. (b) re exceptions to 2% interest rate; P.A. 78-23 referred to accounts serviced “and” held for sale rather than accounts serviced “or” held for sale in Subsecs. (a)(4) and (b)(2); P.A. 79-602 substituted “the” for “such” throughout section; P.A. 88-271 amended Subdiv. (4) by adding the words “and before January 1, 1989” in Subpara. (A) and adding a new Subpara. (B) re payment of interest on escrow accounts by mortgage servicing company when the loan is sold within certain specified periods and the company continues to service the loan; P.A. 14-89 replaced “servicing company” with “servicer”.