| Helpful Hints from MAHT for Calculating the
Amount of Interest that a Transaction is Expected to Generate |
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Title insurers or title insurance agents must place into an interest bearing
MAHT account trust monies held in connection with real estate settlements,
closings, escrows, and title indemnifications that would earn $50 or less in
interest.
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You must return the Annual MAHT Financial Statement of Compliance by March 31st
of each year for both MAHT and non-MAHT accounts.
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The threshold figure that determines whether or not the monies from a
transaction should be deposited into a MAHT account should be revisited on a
regular basis, as interest rates and "float times" on transactions may
fluctuate. The chart below may be used as a guideline in determining a
threshold amount.
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When calculating the amount of interest that a transaction may accrue, title
insurers and title insurance agents should treat the escrowed funds as if the
funds were being placed in their own separate escrow account and the interest
was accruing on that transaction’s escrowed funds only. The interest amount
should not be calculated as if the funds were earning interest in a regular
escrow account where several transactional escrowed monies are commingled and
interest is accruing on the total aggregate amount.
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To determine "float time," a title insurer or title insurance agent should
review a sample of transactions to determine how long funds remain in the
escrow account. A title insurer or title insurance agent may want to ask its
bank for assistance in making this determination.
|
Principal Balances Which
Earn $50 in Interest
When Held for Various Numbers of Days and at Various Interest Rates |
| Annual Interest
Rate |
Number of Days Funds Are
Typically Held |
| 1 Day |
2 Days |
3 Days |
4 Days |
5 Days |
6 Days |
| 1.0 |
1,800,000 |
900,000 |
600,000 |
450,000 |
360,000 |
300,000 |
| 1.5 |
1,200,000 |
600,000 |
400,000 |
300,000 |
240,000 |
200,000 |
| 2.0 |
900,000 |
450,000 |
300,000 |
225,000 |
180,000 |
150,000 |
| 2.5 |
720,000 |
360,000 |
240,000 |
180,000 |
144,000 |
120,000 |
| 3.0 |
600,000 |
300,000 |
200,000 |
150,000 |
120,000 |
100,000 |
| 3.5 |
514,000 |
257,000 |
171,000 |
129,000 |
103,000 |
86,000 |
| 4.0 |
450,000 |
225,000 |
150,000 |
113,000 |
90,000 |
75,000 |
| 4.5 |
400,000 |
200,000 |
133,000 |
100,000 |
80,000 |
67,000 |
| 5.0 |
360,000 |
180,000 |
120,000 |
90,000 |
72,000 |
60,000 |
| 5.5 |
327,000 |
164,000 |
109,000 |
82,000 |
65,000 |
55,000 |
| 6.0 |
300,000 |
150,000 |
100,000 |
75,000 |
60,000 |
50,000 |
| 6.5 |
277,000 |
138,000 |
92,000 |
69,000 |
55,000 |
46,000 |
| 7.0 |
257,000 |
129,000 |
86,000 |
64,000 |
51,000 |
43,000 |
| 7.5 |
240,000 |
120,000 |
80,000 |
60,000 |
48,000 |
40,000 |
| 8.0 |
225,000 |
113,000 |
75,000 |
56,000 |
45,000 |
38,000 |
| 8.5 |
212,000 |
106,000 |
71,000 |
53,000 |
42,000 |
35,000 |
| 9.0 |
200,000 |
100,000 |
67,000 |
50,000 |
40,000 |
33,000 |
| 9.5 |
189,000 |
95,000 |
63,000 |
47,000 |
38,000 |
32,000 |
| 10.0 |
180,000 |
90,000 |
60,000 |
45,000 |
36,000 |
30,000 |
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For example, if the trust monies separately deposited would earn interest at the annual rate of 1.0% and the funds are typically remain in the escrow account for three days, the maximum amount for transactions placed in MAHT accounts is $600,000.
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For More Information:
callison@dhcd.state.md.us
Maryland Affordable Housing Trust
c/o Department of Housing and Community Development
100 Community Place
Crownsville, MD 21032
410-514-7179
Fax: 410-514-7291
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