Customer builds a new home. For the permanent financing the bank will take the newly constructed home in town plus a large farm (over 25 acres) as collateral. Since the farm is over 25 acres; RESPA does not apply but the loan will be a HPML and the bank will have to escrow.

The customer is opting for annual payments because of the timing of their revenue stream. However, how would the bank escrow for taxes and insurance when the customer only has one payment/year? The customer would just make one payment instead of 12 payments?

We have the same situation - how should we do the escrow when only annual payments will be made?

I've never really understood how it's possible to "escrow" under a 12 month cycle if you only collect escrow payments from the borrower annually (i mean, to me, that's just the same as the borrower paying their taxes and insurance annually, like they probably already do). Not saying you can't set up loans on annual payments, but i would think you'd need to have your borrower pay into their escrow account more frequently.

Probably not the answer to your question, but it may at least bump your question back into discussion.

That's what makes it interesting. When I called FDIC, they said we could (understood the farmer angle of it and currently no prohibition against it, that is needed for the HPML requirements and had posed that question to the CFPB but had received no answers back)

We had someone that wanted to do this initially -- we were going to make escrow payments monthly.