I asked "why" because the initial question did not explain the context. Business purpose loans are exempt from escrow as are HELOCs. Neither product type has escrow systems, as many comments pointed out, hence the exemption.
I grabbed this from the first regulator section but it is identical in all (FRB, OCC, FDIC, etc.)
Loan-Related Exceptions
Section 102(d) of the FDPA, as amended by section 25 of HFIAA, contains several exceptions to the general escrow requirement. These exceptions include:
(i) loans that are in a subordinate position to a senior lien secured by the same property for which flood insurance is being provided;
(ii) loans secured by residential improved real estate or a mobile home that is part of a condominium, cooperative, or other project development, provided certain conditions are met;
(iii) loans that are secured by residential improved real estate or a mobile home that is used as collateral for a business purpose;
(iv) home equity lines of credit;
(v) nonperforming loans; and
(vi) loans with terms not longer than 12 months.
These exceptions are in addition to the small lender exception applicable to certain regulated lending institutions that have total assets of less than $1 billion set forth in section 102(d) of the FDPA, as amended by section 100209 of Biggert-Waters, discussed below. Numerous commenters supported these exceptions.
Last edited by Kathleen B; 06/30/15 08:25 PM. Reason: for clarity