How to Cancel an Escrow Letter

The lender has to be in agreement to cancel an escrow.

Buying a home is a lengthy process. One part of this process is a deposit of funds into a third-party account that proves your willingness and ability to pay. This deposit is called escrow. These funds, held by the third party, assure the lender that the money you promised will be available. Canceling the purchase of a house requires an agreement from the lender to cancel the contract and escrow. The details of your original contract may or may not describe how this can best be accomplished.

Step 1

Contact the lender via certified mail. Request that your purchase contract be canceled. List the reasons for your request and wait for a response.

Step 2

Send the lender a second certified letter upon receipt of a positive response to your cancellation request. Ask the lender to authorize the release of the funds in the esrow account. Wait for a response to this request.

Step 3

Make a copy of each of the letters you sent to the lender. Place these copies in an envelope along with copies of the lender's response to each request.

Step 4

Make a copy of your original contract. Highlight sections of the contract that outline the escrow fund management. Place the copy of your contract in the envelope with the other letters.

Step 5

Draft a letter asking the escrow company to honor your wishes and those of the lender by canceling the account and returning the funds immediately. Send the envelope to the escrow company via certified mail.

Step 6

Wait for the escrow company to respond. Expect the escrow company to deduct fees from the funds, including those due to the lender.

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