Like most of you escrowing is new to our bank. I am having a trouble understanding how escrow works on a home equity when the borrower is not supposed to bring any money to closing. Will the initial escrow deposit be subtracted from the loan proceeds?
Will the initial escrow deposit be subtracted from the loan proceeds?
Or added to the loan amount. I also assume you are referring to a closed end home equity loan in a first lien position, otherwise escrow would not be required.
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The opinions expressed are mine and they are not to be taken as legal advice.
Thank you so much for your quick response. I really appreciate it. And yes, it is a closed end home equity loan in a first lien position that I was asking about.
The HPML changes start Oct 1, 2009 with escrow not being compliant until April 1, 2010. Do the loans made between Oct 09 and April 10 have to be escrowed or only the loans forward from April 2010?
Just to make sure I am not missing anything, on October 1st we must:
*Begin reporting the new Rate Spread on the HMDA LAR *Identify HPMLs *Verify repayment ability with 3rd party documents using the largest scheduled payment of P&I in the first seven years of the loan. *Evaluate the DTI ratio and the income that the borrower will have after paying debt obligations. *Observe limit of pre-payment penalties
Is there anyway to check loans we currently have on the books to see if they would be HPML if we were doing them in Oct. I know that sounds funny but we do 3 year loans and the rates are pretty high. Many of them were over the rate tolerance on HMDA.
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