When must a notice of the borrower's right to discontinue their escrow account be given?

The correct timing for providing a notice regarding the borrower's right to discontinue their escrow account is indeed after the loan reaches its fifth anniversary. This aligns with the requirements set forth in federal mortgage regulations. After five years, borrowers are typically allowed to request the closure of their escrow account if they meet certain criteria. This notice is important because it informs borrowers of their rights regarding their mortgage payments and managing their finances.

In contrast, the other options do not align with regulatory standards. For instance, providing the notice upon closing or at the issuance of the loan documents would not be appropriate, as these events occur before the five-year mark and do not reflect the specific right to terminate an escrow account that becomes applicable after a longer period of consistent payment and account stability. Additionally, delivering this notice before the loan application is submitted is impractical, as the borrower needs to have a valid loan agreement in place to discuss escrow options meaningfully.