WASHINGTON After years of debate, the government is about to force mortgage lenders to refund to homeowners up to $5 billion held in escrow.

The Department of Housing and Urban Development has concluded that lenders across the country have routinely overcharged homeowners to fund escrow accounts for property tax and insurance payments.

In a press conference slated for today, HUD will unveil a rule that will trim borrowers' monthly payments and lay the groundwork for refunds. HUD estimates the refunds will total about $1.5 billion, but a group of state attorneys general says the figure could reach $5 billion.

"A large number of servicers will be making some refunds," said Frederick J. Eggers, deputy assistant secretary for economic affairs at the Department of Housing and Urban Development.

Over the past several years, escrow accounting has been one of the most contentious issues in mortgage lending. The debate has often pitted mortgage lenders against consumer groups, state governments, and members of Congress.

Critics have charged that lenders systematically "pad" escrow accounts in order to earn interest income.

The mortgage industry, in response has often said that curbs on escrow charges would reduce the value of servicing rights and therefore drive up costs to consumers.

The rule, to be announced by assistant secretary for housing Nicolas P. Retsinas, says that lenders may keep a cushion equal to two months' payments, but no more. Many lenders have kept a cushion equal to payments over three months.

Lenders have three years to adopt the new method for existing accounts. Loans made after the rule goes into effect early next year will be escrowed according to the new method.

Robert M. O'Toole, senior staff vice president of the Mortgage Bankers Association. said the rule is "extremely positive," because it gives clear direction to lenders.

"It provides uniformity so when servicing transfers take place the consumer will not be impacted by one lender using different rules than the other," Mr. O'Toole said.

But, he said, the trade group believes the government's $1.5 billion estimate of consumer refunds is "overstated."

Observers say that many of the largest lenders have changed their escrow practices in the last few years. in response to suits filed by the state attorneys general against GMAC Mortgage Corp. and Fleet Mortgage in the early 90s.

Both companies settled. GMAC has refunded $70 million to consumers over the course of a year, according to Mel Goldberg, assistant attorney general of New York.

Mr. Goldberg said his office estimates Fleet will refund $150 million over 18 months.

Those most likely to be affected are smaller mortgage bankers, who use large escrow accounts to get better terms from banks on the funds they lend to mortgage borrowers.

For consumers, the new will mean not only lower ments, but also clearer and account statements.

"We want to make sure consumer can understand his or her fights [are] with respect to the accounts, [and] the information to understand that the accounts are being maintained properly," said Mr. Eggers, of HUD.

Chris Lewis of the Consumer Federation of America welcomed the new rule as "a major step forward in the fight to gain justice for the nation's homeowners."

But Mr. Lewis said that consumer advocates will continue to lobby for yet another changelegislation that would require all lenders to pay interest to borrow ers on escrow accounts.

The chairman of the House Banking Committee, Rep. Henry Gonzalez, D-Tex., has drafted a law to do just that.

But the bill was not offered this year, in an effort to muster Republican support for other contested provisions of an omnibus housing bill.

A more heavily Republican Congress makes such a law more unlikely in the near future, Mr. Lewis said.

But he added consumer advocates would pursue this issue in dozen or so states that do not currently require interest payments.

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