If we have a second mortgage HPML, we don't have to escrow because it is a second? Do we have to do the interior appraisal? Is there any other requirement that we have to meet?
We don't pre-payment penalties or negative amortization.

The HPML escrow requirements in 1026.35(b) only apply to first-lien HPMLs.

The appraisal requirements in 1026.35(c), however, apply both to first-lien and junior-lien HPMLs.

Is there a requirement to escrow for flood on a second?

Under the proposed regulations:

However, if the first lienholder is not required to or otherwise does not escrow flood insurance premiums and fees for adequate insurance coverage for the residential improved real estate or a mobile home, the proposed rule would require the regulated lending institution in the second lienholder position to escrow required flood insurance premiums and fees, unless such regulated lending institution qualifies for an exception from the escrowing provisions.