I recently got back from a Compliance seminar and one thing that was discussed was higher priced mortgage loans. One suggestion for manuvering around the HPML threshold would be to make a first mortgage for a low amount at a lower rate and then make a second mortgage for the larger amount. This would give you a little more wiggle room since with the second lien you would be looking at a 3.5% threshold rather than the entire amount on a first lien at a 1.5% threshold. Does anyone know if the regulation prohibits this or has their been and commentary on the matter?

As long as neither loan is an open-end loan, I think you may be OK. 12 CFR 226.35(b)(4) specificially prohibits structuring a home loan as an open-end loan to evade the requirements of the HPML section.

Thats what i thought too. Besides totally spitting in the face of the regulation i couldn't find anything wrong with it either.

And I STILL don't get the big deal with HPML that it has to be manuvered around. Seriously, what are people trying to avoid and why? I'd rather make a borrower escrow than have to duck and weave around my examiners.

haha, i hear you Truffle, this was just something brought up by some old school banker that will eventually come back to bite him. I personally don't find anything wrong with escrowing, it's not hard most of it is automated.