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#2142622 - 08/18/17 03:25 PM Home Improvement - 9 months- HPML ESCROW-
Carol Hopper Offline
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Carol Hopper
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Central Missouri
[b][/b]We have a request for a 9 month Home improvement loan secured by a first lien. The home is a second home for the customer. She will occupy more than 14 days per year. The loan is HPML- are we required to escrow on it? Does this loan qualify for temporary or is it only bridge and construction loans.
Last edited by Gr8Hoppers; 08/18/17 03:27 PM. Reason: more details
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Escrows on Higher-Priced Mortgages
#2142695 - 08/18/17 06:01 PM Re: Home Improvement - 9 months- HPML ESCROW- Carol Hopper
Dan Persfull Offline
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Bloomington, IN
HPML escrow requirements only apply to the consumer's primary residence.
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#2149970 - 10/16/17 07:38 PM Re: Home Improvement - 9 months- HPML ESCROW- Dan Persfull
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Let's say the same situation, except that it IS the principal dwelling of the consumer. Would such a loan be subject to the appraisal and escrow requirements, or is this considered a "temporary" loan? Based on the Official Commentary, it seems that a temporary loan really refers to a "bridge" loan to buy another property. At least the Appraisal exemption part specifies that more clearly. Is it exempt from the Escrow requirement, but not the Appraisal requirements, or would both apply because the exemption does not apply? Does it make a difference if they intend to refinance at the end of the short-term?

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#2150028 - 10/17/17 11:05 AM Re: Home Improvement - 9 months- HPML ESCROW- Carol Hopper
rlcarey Online
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rlcarey
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Galveston, TX
Any loan of 12 months or less are exempt from escrows.
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#2150056 - 10/17/17 01:56 PM Re: Home Improvement - 9 months- HPML ESCROW- Carol Hopper
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So, is your take that such loans are exempt from the Escrow piece, but not the additional appraisal requirements piece, i.e. 1026.35(c)(3) - (c)(6)?

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#2150169 - 10/17/17 08:09 PM Re: Home Improvement - 9 months- HPML ESCROW- Carol Hopper
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That makes sense that the Escrow provisions would not apply - what use would it be on a less than 12 month period?

It seems like the additional Appraisal requirements are applicable though.

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#2211371 - 04/17/19 04:07 PM Re: Home Improvement - 9 months- HPML ESCROW- Carol Hopper
Dodge Offline
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Will a 12 month interest only home improvement loan that will be paid off at the end of 12 months be exempt from HPML escrow rules? To me it does not meet any of the exemptions.

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#2211388 - 04/17/19 04:59 PM Re: Home Improvement - 9 months- HPML ESCROW- Carol Hopper
rlcarey Online
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Galveston, TX
What is not temporary about a 12 month home improvement loan?

1026.35(b)(2) Exemptions. Notwithstanding paragraph (b)(1) of this section:

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

((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;
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#2211393 - 04/17/19 05:32 PM Re: Home Improvement - 9 months- HPML ESCROW- Carol Hopper
John Burnett Offline
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John Burnett
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Cape Cod
In the text Randy cites, paragraph (C) uses the "loan to purchase a new dwelling where the consumer plans to sell a current dwelling within twelve months" as an example of a temporary or bridge loan (actually, it's a good example of bridge loan), but it's not an exhaustive description limiting what is considered a temporary loan.
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