If the 1st lien secured mortgage was not escrow, do we have to do escrow for the 2nd Lien HPML? The regulation only talks about 1st Lien. Are we supposed to verify that the first mortgage is escrowed and if not, do it for the 2nd one? Or are we exempt because it's a 2nd lien HPML?

I can't find a definite answer.

Subordinate lien loans are not subject to the HPML escrow requirements.

I need some more clarification. If the first mortgage was not a HPLM and it was not escrowed, or it was disbursed prior to the rule, wouldn't we still be required to escrow as a subordinate loan because the original one was not?

No, like Dan said, the mandatory escrows only impact 1st lien loans. The 1st lien loan is already on the books.

Thank you so much for your help. I just needed to sort some things out. Below is what prompted my questions, in case you wondered.

Most of what I read discussed only 1st lien loans. And then I read "1" question on Bankersonline that through me off. And then I got all confused. The question is below. I guess it only takes one comment to argue my own opinion.

"Do we Need to Escrow?
Answer by Dan Persfull, BOL Guru
Guru Bio

Question: I need clarification. I have an existing loan that is active on my books. The mortgage was a multiple indebtedness mortgage, and the loan was put on the books prior to the high-priced mortgage regulation. This is the borrower's primary residence. There is no escrow established on this loan. The borrower then came in and wanted a second loan for whatever reason. The second loan was made using a new promissory note, but using the existing MIM. The original loan was left in place. No refinancing is being done of the original note. Do we need to escrow?


Answer: Yes you do, assuming tht the loan is for a consumer purpose. The existing mortgage is in a first lien position on the consumer's primary residence. The second loan is secured by the first lien mortgage; therefore, 226.35 is applicable.

First published on BankersOnline.com 9/20/10"

Well now you need to be more precise in your question. Are you referring to a subordinate lien or a second loan secured by a first lien security instrument?

If your second loan is secured by the same mortgage (lien) as the first loan is then they both are secured by a first lien and you must escrow for the second loan if it meets the HPML escrow requirements.

Only subordinate lien loans are exempt from the escrow requirements. To be subordinate means there has to be a separate security agreement that is superior to your security agreement. If both loans are secured by the same security agreement then they are equally secured by the agreement. There is no superior or subordinate lien to the agreement.

Thank you