UNDERSTANDING THE ESCROW ANALYSIS

Wachovia Real Estate Services performs an annual Escrow Analysis and uses a combined method of escrow analysis. This means each separate tax and insurance escrow item is analyzed separately, however, the overage or shortage amounts are combined for a net overage or shortage amount. This overage or shortage amount is spread over twelve (12) months payments or until the next escrow analysis is performed.

The Amount is the annualized amount of last year's tax and insurance payment amounts plus an inflation factor for tax and insurance amounts.

Insurance - 5% inflation factor
Taxes - 5% inflation factor, except 2% in CA, and 8% in the NYC Burroughs

The Monthly Calculated Amount is determined by taking the Annual Amount divided by the number of months in the analysis cycle. Since we perform an annual escrow analysis, we use 12 months in the formula.

The Disbursement Date is the date of the next scheduled disbursement, which is based on the tax due date (or discount date, if applicable), and the insurance premium due date.

The Months Required is the number of months in the analysis cycle (12) minus the number of months until the next disbursement date. Please note: In order to make payments in advance of their delinquency dates, we require you to have the funds in the escrow accounts the month before the disbursement date.

The Required Escrow Balance is the amount of money that must be held in your escrow account on the payment effective date to ensure sufficient monies to make the next disbursement. The Required Escrow Balance is determined by multiplying the Months Required by the Monthly Calculated Amount.

The Expected Escrow Balance is a calculated field which contains the total amount of escrow that should be collected by the time the payment is due. This is determined by adding what is already collected (current escrow balance) to the amount we expect to collect (future amount due or scheduled amount to be paid) up to the time the new escrow analysis payment takes effect.

The Balance Difference is the difference between Required Escrow Balance and the Expected Escrow Balance. This difference is the overage or shortage amount in the escrow account. Wachovia spreads overages and shortages over a twelve (12) month period or until the next escrow analysis is performed. If this figure is a negative figure, then your escrow account is short, if this figure is a positive figure, then your escrow account has a surplus.

The Monthly Shortage or Surplus amount is calculated by dividing the Balance Difference by the number of months between the new monthly payment date and the next analysis date. For example, if the new payment date is November, and the next analysis date is August, the number of months between November and August is nine months.

The New Monthly Constant is the difference between the Monthly Calculated Amount and the Monthly Shortage or Surplus amount.

The Change Amount is the difference between the old payment amount and the new payment amount. If this figure is a negative figure, then your new payment is decreased from the previous payment amount. If this figure is a positive figure, then your new payment is increased from the previous payment amount. The escrow payment will remain in effect until the next escrow analysis is performed.

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Wachovia Securities is the trade name for the corporate and investment banking services of Wachovia Corporation and its subsidiaries, including Wachovia Capital Markets, LLC ("WCM"), member FINRA/SIPC.

Debt and equity underwriting, trading, research and sales, loan syndications agent services, and corporate finance and M&A advisory services are offered by WCM.

Mezzanine capital, private equity, municipal securities trading and sales, cash management, credit, international, leasing and risk management products and services are offered by various non-broker dealer subsidiaries of Wachovia Corporation.