We lock our rates at time of application. We have a loan that was determined to be a HPML. Now that rates have risen, at the time of closing the loan would not be HPML. Would we use the application date for the determination or the closing date?

§1026.35 Requirements for higher-priced mortgage loans.

(a) Definitions. For purposes of this section:

(1) "Higher-priced mortgage loan" means a closed-end consumer credit transaction secured by the consumer's principal dwelling with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set:

Is Escrow required on an HPML loan has a term less than 12 mos, (ie 6 mos)? Loan could possibly renew at the end of the term.

Gami: Does your loan meet any of the exemptions listed in 1026.35?

b) Escrow accounts. (1) Requirement to escrow for property taxes and insurance. Except as provided in paragraph (b)(2) of this section, a creditor may not extend a higher-priced mortgage loan secured by a first lien on a consumer's principal dwelling unless an escrow account is established before consummation for payment of property taxes and premiums for mortgage-related insurance required by the creditor, such as insurance against loss of or damage to property, or against liability arising out of the ownership or use of the property, or insurance protecting the creditor against the consumer's default or other credit loss. For purposes of this paragraph (b), the term "escrow account" has the same meaning as under Regulation X (12 CFR 1024.17(b)), as amended.

(2) Exemptions. Notwithstanding paragraph (b)(1) of this section:

(i) An escrow account need not be established for:

(A) A transaction secured by shares in a cooperative;

(B) A transaction to finance the initial construction of a dwelling;

(C) A temporary or "bridge" loan with a loan term of twelve months or less, such as a loan to purchase a new dwelling where the consumer plans to sell a current dwelling within twelve months; or

(D) A reverse mortgage transaction subject to § 1026.33(c).

When you say "as of the date the interest rate is set" would that be deemed as the "date the rate is locked" which in this case was at application?