What is an Escrow Hold Back?

If the mortgage lender allows for it, using an escrow hold back can potentially save a transaction in the event that repairs are needed on the subject property.

In real estate, an escrow hold back most commonly refers to when a portion of the home sale proceeds are withheld in an escrow account pending completion of certain repairs on the property.

So for example, if you wanted to buy a home that needed repairs, but you wanted to close the sale prior to the repairs being completed, it might be possible to do an escrow hold back.

In this scenario, a portion of the sale of the property would be held back from the seller, until he completed the needed repairs. Now with that in mind, many mortgage lenders will not allow an escrow hold back to be done during a transaction.

This is because of Fannie Mae Guidelines, which generally require homes acting as collateral to be complete before a loan is closed.

Escrow hold backs are typically considered on a case by case basis, and lenders that do it, will probably want some assurance that the needed repairs will be fixed within 2 or 3 weeks of the close of the

 

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