Regarding escrow requirements on higher priced mortgages: is there a time when the borrower can be released from the escrow requirement?
We have a client who currently owns their primary residence and they are wanting to do a major renovation to the property The bank is looking at extending them a future advance â€“ non-revolving loan for 12 months. The loan will be used to pay-out the 1st lien holder and provide funding for the renovations. We have a conditional permanent take out for the loan upon completion and/or the maturity of the loan. Monthly payments will be interest only during the 12 months- renovation phase. The regulation states a Higher Cost loan is: a closed end loan, secured by a consumerâ€™s principal dwelling, for consumer purpose and has an APR exceeding the average of prime offer rate by 1.5% for a 1st lien or 3.5% for a subordinate lien. It excludes: HELOCâ€™s, reverse mortgages, construction only loan and bridge loans with a term of no more than 12 months. Due to some of the variables of our scenario, we are unsure how to treat it. This isnâ€™t a construction from the ground up, itâ€™s not a revolving credit and the permanent take out that we have is conditional. We have conflicting opinions on how this particular situation fits in with the reg. The biggest difference is in how we treat it, on whether or not we have to have the taxes and insurance escrowed during that 12 month period. Our bank does not escrow for any other loans other than Higher Cost Loans which we are required to. Any insight you can offer will be greatly appreciated.
Can you point me to the section of RESPA that refers to not deducting the escrow balance on a payoff?
Reg O states that increases to existing indebtedness are not considered extensions of credit so long as "the additional funds are advanced by the bank for its own protection for accrued interest or taxes, insurance, or other expenses incidental to the existing indebtedness." Is a loan fee that was included in the amount financed included in this exception? Example: Executive Officer A has a loan for $100,000.00 with a $500 loan fee and an appraisal fee of $300 for a total amount financed of $100,800.00. Would this be a Reg O violation?
A bridge loan has a term of 12 months and one of the properties is the customer's homestead. Is escrow still required even though there is temporary financing?
Regarding escrow accounts, does the reg (Reg X - Section 3500.17) specify that only primary residences apply? Do we need to escrow accounts where the loan was only modified with no money advanced?
Is a 203K refinance reported as a Home Improvement loan for HMDA purposes since rehab dollars are included in the total dollar amount but held in escrow and disbursed later?
Is escrow required for HELOCs? The borrower does not currently have a first mortgage on their property.
We have a refinance of a new construction note (no seller) where the sod and sprinklers were unable to be completed prior to closing the permanent loan. The title company is holding the funds in an escrow account to complete the sod and sprinkler work after the loan closes. The sod and sprinkler escrowed funds are apart of the original construction loan amount and not a settlement service in my opinion. Where do we put the funds that are held in the escrow account at the title company on the settlement statement? Do we put them in the 1300 section? Do we leave it off the settlement statement all together since it is not a settlement charge?
We are completing a mortgage Loan that is a HPML and we are escrowing taxes. Can the customer opt out of escrowing after one year of payments?