We have a HPML loan up for renewal -- wondering if the escrow requirements apply. The rule doesn't specifically spell out anything about renewals, just mentions refis.

If the loan qualifies as an HPML at renewal then escrow requirements should apply. You would need to document the retest for the HPML qualifications and move foward with the escrow if needed.

To the original poster: Are you talking about the rural/underserved exemption? Or just generally? If the original HPML had an escrow account (and unless it was a 2nd lien or a mobile home loan that met that short window of time when you didn't have to escrow for mobile homes, i don't know why it wouldn't), then modifying the loan doesn't change anything in regards to your escrow account........you'd just let the escrow account continue, even if you meet the rural/underserved exemption. If you refinance the loan (extinguishing the original note), then you could claim the rural/underserved exemption and not escrow for the new loan.

The original loan was done prior to the HMPL escrow rules, so no escrow in place. Now it's up for renewal, so wondering if now we have to start escrowing. I'm thinking the rules would apply.

A modification isn't subject to Sec. 35.

(1) "Higher-priced mortgage loan" means a closed-end consumer credit transaction......

Credit isn't being extended in your scenario.....just "renewed".

Good to know! Thanks!!

The confusion comes because you are referring to the original loan as an "HPML", but as you say, it predated the HPML rules. Your loan isn't an HPML and as long as you are only extending/modifying it and that extension/modification doesn't rise to the level of a refinancing for Reg. Z, the HPML rules aren't triggered.

I think the question to ask here is how your institution handles the renewal of loans. If you do a new prommisoory note which will extenguish the old note it is then a refi not a renewal. I have asked this question on several occassions and always get the same answer. Since we type a new note here when we "renew" a loan we start an escrow at that time.

Bringing this thread back to "life" a bit. I believe the answer is here, but, let's say you have a bank that only does HPML mortgages, but they lost their small creditor exemption because they failed to originate any covered transactions during the "look-back" period. When the balloon loan is coming up on maturity, if it is a "refinance" as defined by Reg. Z, then the bank would be required to comply with the HPML escrow rules. However, if the Bank "renews" the loan in a manner that does not constitute a refinance, then they are not required to comply with the HPML escrow rules and just "keep it moving. Correct?

If it is not a refinance under 1026.20(a) it is not covered by any part of the Regulation Z.

Unless it's a purchase