Escrow Minimum Balance

[Adam DuCharme]

My mortgage was sold to another institution last year and it seems like they handle escrow differently. My previous bank would pay the taxes and insurance when due and collect those balances equally throughout the year. So my escrow account could technically be negative for some of the year if, for example, taxes are collected halfway through the year but everything would be settled by the end of the year. My new bank requires that requires that I have a positive balance of 2 months escrow payments in my account at all times, meaning my account is a few thousand dollars "behind" on this balance. To fix this, the bank has added a shortage payment to my monthly mortgage until that positive margin is achieved. However, increasing insurance rates means that this shortage is also increasing so my monthly payment is increasing exponentially to accommodate the increase in both my insurance rate and my shortage (my mortgage has increased over $400 monthly in the past 1.5 years because of these factors).

TL;DR - Is it normal for a bank to require a positive escrow balance at all times like my current bank does? Or do most banks only charge escrow based on payments for that year like my first bank did?