Escrow Shortage

When your escrow amount goes below a certain threshold, this is an escrow shortfall. We'll get into how that level is defined later, but for now, know that you have a shortage whenever the minimal balance isn't met. In addition to scarcity, there is something known as an escrow deficiency. This occurs when you do not have enough funds in your escrow account to cover all of your escrow things, such as taxes and insurance. In that situation, you'll have a negative balance in your account, and your mortgage lender will advance the difference between what's in your account and what's owed. You'll have to pay this back when your subsequent escrow analysis is performed.