12 CFR §1026.21 — Treatment of credit balances
Regulation Z §1026.21 governs credit balances in excess of $1 in closed-end consumer credit accounts (mortgage payoffs, escrow refunds, finance-charge rebates). [LENDER] (as creditor) must (a) credit the credit balance to the consumer's account; (b) refund any part of the remaining credit balance upon the consumer's written request; and (c) make a good-faith effort to refund any part of the credit balance remaining for more than six months by cash, check, money order, or credit to a deposit account — except that no further action is required if the consumer's current location is not known to [LENDER] and cannot be traced through the consumer's last known address or telephone number. Operative in the mortgage context for payoff/postclose overpayment refunds and HELOC payoff refunds.
Verbatim regulatory text
Verbatim provisions from 12 CFR §1026.21 — Treatment of credit balances — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
12 CFR §1026.21(a) — Credit the credit balance to the consumer's account
When a credit balance in excess of $1 is created in connection with a transaction (through transmittal of funds to a creditor in excess of the total balance due on an account, through rebates of unearned finance charges or insurance premiums, or through amounts otherwise owed to or held for the benefit of a consumer), the creditor shall:
12 CFR §1026.21(b) — Refund credit balance upon consumer's written request
Refund any part of the remaining credit balance, upon the written request of the consumer ;
12 CFR §1026.21(c) — Good-faith refund of credit balance held more than 6 months
Make a good faith effort to refund to the consumer by cash, check, or money order, or credit to a deposit account of the consumer , any part of the credit balance remaining in the account for more than 6 months, except that no further action is required if the consumer 's current location is not known to the creditor and cannot be traced through the consumer 's last known address or telephone number.
12 CFR §1026.21(a) — Credit the credit balance to the consumer's account — enumerated items (chapeau recall fix)
(a) Credit the amount of the credit balance to the consumer 's account; (b) Refund any part of the remaining credit balance, upon the written request of the consumer ; and (c) Make a good faith effort to refund to the consumer by cash, check, or money order, or credit to a deposit account of the consumer , any part of the credit balance remaining in the account for more than 6 months, except that no further action is required if the consumer 's current location is not known to the creditor and cannot be traced through the consumer 's last known address or telephone number. CFR Toolbox Law about...