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#2120462 - 03/03/17 06:04 PM Close Regulations
George Offline
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Joined: Apr 2016
Posts: 364
Can anyone shed some light on the regulations regarding when we are allowed to close and escrow account. I know we can after 5 years. However, I have read that it was proposed that there had to be 20% equity in the property. Is this true?

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Escrows on Higher-Priced Mortgages
#2120470 - 03/03/17 06:32 PM Re: Close Regulations George
PCBDebbie, CRCM Offline
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Joined: Aug 2015
Posts: 156
Is this an HPML loan? If so, the requirement is at least 5 years. Keep in mind there are notification requirements for any escrow cancellation under TRID (customer or lender requested)

From the CFPB compliance guide for HPML Loans:
You must maintain the escrow account until one of the following occurs: 1) the underlying debt obligation is terminated or 2) after the five-year period, the consumer requests that the escrow account be canceled. However, if you are canceling the escrow account at the consumer’s request, the loan’s unpaid principal balance must be less than 80 percent of the original value of the property securing the underlying debt obligation, and the consumer must not be currently delinquent or in default on the underlying obligation – so if these conditions are not met, you will need to maintain the escrow account beyond five years.

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#2120598 - 03/06/17 03:12 PM Re: Close Regulations George
George Offline
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Joined: Apr 2016
Posts: 364
Thank you!

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#2127123 - 04/19/17 09:09 PM Re: Close Regulations George
kbaird Offline
Junior Member
Joined: Dec 2015
Posts: 35
What about if the escrow was established for an HPML prior to the requirement to wait 5 years after the escrow was established...back when the wait was just 1 year? Is there any kind of grandfather clause for those?

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#2127130 - 04/19/17 09:27 PM Re: Close Regulations George
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
No grandfathering:

The only expansion of substantive
requirements under this final rule is the
extension from one to five years of the
minimum duration generally applicable
to escrow accounts required by the rule.
The Bureau believes that even this
expansion of the protection afforded
consumers by escrow accounts will
impose at most a modest increase in
compliance burden for creditors because
it simply extends an otherwise already
applicable requirement by four
additional years. Even this minimal
additional burden will not be
encountered by any creditor until at
least one year after the rule’s effective
date, when cancellation of mandatory
escrow accounts otherwise first would
have become permissible for the earliest
higher-priced mortgage loans to be made
after this final rule takes effect.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2127232 - 04/20/17 02:34 PM Re: Close Regulations George
kbaird Offline
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Joined: Dec 2015
Posts: 35
Thanks, rlcarey!

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#2127826 - 04/25/17 02:28 PM Re: Close Regulations George
Bville Offline
Diamond Poster
Bville
Joined: May 2001
Posts: 1,282
Out West
I thought that five year escrow rule was only effective for applications received on or after June 1, 2013. It seems if I made an HPML on May 1, 2013 it would still be under the old 1-year escrow cancellation rule.

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#2127836 - 04/25/17 02:54 PM Re: Close Regulations George
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Bville - you are correct, I with my previous statement frown

DATES: Effective date: The rule is effective June 1, 2013.
Applicability date: Its requirements apply to transactions for
which creditors receive applications on or after that date.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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