Skip to content
GeoDataVision
Thread Options
#1410138 - 06/30/10 06:04 PM HPML/Escrow/2 Principal Dwellings?
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,763
OK
I know Reg Z says a consumer can only have one principal dwelling at a time, but also in the OSC 226.23(4) it gives the special rule that a loan to buy a home that will become the principal dwelling of the borrower and secured by either their current principal dwelling or their current principal dwelling and the home being purchased, is rescindable. The latter of these is the scenario i'm looking at: home being purchased and current home both securing this purchase loan. However, we are not treating it as a bridge loan (at least in my mind)...it's not temporary; it's set up as a 3 year balloon with the LO noting that when first home sells, they will apply that to this loan (and then look at possibilities in secondary market). So i know this is rescindable. My question pertains to HPML and escrows.....i don't believe i can exempt this from HPML, as it isn't temporary financing. So it appears we must escrow. But, escrow for which? The new home being purchased? The current home? Both? Thanks for any help. (Almost forgot another important part of this.....home being purchased is a mobile home....so we would be good not escrowing for that one since we aren't in October yet....) So i guess my question gets amended.....do i have to escrow for the current home?
Last edited by raitchjay; 06/30/10 06:05 PM.
_________________________
I'm fixin' to fix that.

Return to Top
Lending Compliance
#1410182 - 06/30/10 06:26 PM Re: HPML/Escrow/2 Principal Dwellings? raitchjay
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,763
OK
Anyone? Closing is this afternoon. SHOULD we do this as a bridge loan? Something about this isn't sitting right in my mind, but i don't know what it is.
_________________________
I'm fixin' to fix that.

Return to Top
#1410229 - 06/30/10 06:48 PM Re: HPML/Escrow/2 Principal Dwellings? raitchjay
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,763
OK
Revision: Both homes are mobile homes, so i think all is well...no escrowing because we aren't in October yet. But what if this were past October or either or both homes were regular 1-4 families? I'd like to know what the ultimate answer is here or if i'm missing something simple.
_________________________
I'm fixin' to fix that.

Return to Top
#1410281 - 06/30/10 07:17 PM Re: HPML/Escrow/2 Principal Dwellings? raitchjay
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,835
Bloomington, IN
If the loan was subject to the current escrow requirements I would opine you would only need to escrow on the "primary residence" being purchased.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1410287 - 06/30/10 07:23 PM Re: HPML/Escrow/2 Principal Dwellings? Dan Persfull
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,763
OK
Dan...just for clarification.....what if we were making the loan today and the home being purchased was a mobile home, but the current home was a 1-4 family. No escrow for the mobile home being purchased. No escrow for the 1-4 family that is the current dwelling either?
_________________________
I'm fixin' to fix that.

Return to Top
#1410311 - 06/30/10 07:37 PM Re: HPML/Escrow/2 Principal Dwellings? raitchjay
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,835
Bloomington, IN
Keep in mind these are just my opinions, but ones I think I could support if the need arose.

The purpose of the loan is to purchase a new "primary dwelling", and I don't remember the exact wording but somewhere in the vicinity of the section you quoted earlier there is a statement about the home being built or purchased becoming the consumer's primary dwelling if occupied by the consumer within one year, therefore the basis for my opinion the escrow requirements would apply to that dwelling.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1410320 - 06/30/10 07:43 PM Re: HPML/Escrow/2 Principal Dwellings? Dan Persfull
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,763
OK
Thanks.....i think your opinion makes the most sense and i agree.....it's kind of a gray area in my opinion though....Reg Z to me with that "special rule" is basically saying in that instance (at least so far as rescission goes) that a consumer can have TWO primary dwellings....so....if they carry that logic over to HPML....just kinda interesting to me and something i hadn't thought of.
_________________________
I'm fixin' to fix that.

Return to Top
#1410364 - 06/30/10 08:25 PM Re: HPML/Escrow/2 Principal Dwellings? raitchjay
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,835
Bloomington, IN
I started to address that then decided not to just not to get off on another topic.

I would not try to relate HPML requirements to the ROR requirements.

HPML places certain requirements and restrictions on the lender when taking the consumer's primary dwelling as security whether a residential mortgage transaction, a refinancing or just a cash out equity loan.

ROR does the same but more importantly it also gives the consumer the right to cancel the transaction if they decide they don't want to jeopardized their current primary dwelling and there is special provision to allow for this when the consumer is constructing or purchasing a new primary dwelling and securing the loan with their current primary dwelling. There is no such special provision in 226.35.

Again, until we see some official guidance these are only opinions and as you state a gray area. But I would be comfortable supporting my opinion.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1410376 - 06/30/10 08:34 PM Re: HPML/Escrow/2 Principal Dwellings? Dan Persfull
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,763
OK
Interesting topic. Thanks for your opinion.
_________________________
I'm fixin' to fix that.

Return to Top
#1410651 - 07/01/10 03:52 PM Re: HPML/Escrow/2 Principal Dwellings? raitchjay
West Coast Comp Offline
Gold Star
West Coast Comp
Joined: Jun 2010
Posts: 350
Lost in the rain.
IMHO, to your original I would require escrows on both and be done with it.
_________________________
Where I go there I am. smile

Return to Top

Moderator:  Andy_Z