i posted a question about a negative balance that happened in an insider's escrow account. We covered it. However, I am sure this has happened to other banks where an insider, with a mortgage and escrow account has an unprojected increase in a payment and the escrow account goes negative. We are in a disagreement here as to whether this represents an "extension of credit" or not in view of how an escrow account fits into the whole scheme of things as it relates to Reg O. Or, can we hang our hat on 215.3(a)(5)(ii), do another escrow analysis so that the increased payment will cover the negative balance in ,say three months time.

Recommendations/comments, experiences welcome!

I think you have the correct citation and it should not be considered an extension of credit under the circumstances described.

Thanks.