Just want to make sure I have this straight in my mind.

Loan is a 180 month mortgage loan and was originated before 1/1/16. The residence securing the loan is located in the flood zone, has flood insurance in place and is not currently being escrowed.

Loan has 6 months until maturity. Customer requests a 2 month extension.

Based on the fact the term "of not longer than 12 month" exemption is referring not to the remaining term, but the original term of the loan.

Escrow would have to be set up for this loan if the extension is processed. Correct?

I would say it is the term of the loan at the time of the MIRE event. Escrowing for 8 months is not required and doesn't make any sense, unless you know that they are going to renew at that time and want to get it started.

Thanks Randy.

I am having a hard time finding where the distinction is made in the Regulation or the Preamble to the escrow changes as to whether it is original term or remaining term.

Can someone point me to where this distinction is made?

It just makes sense. You modify in June, and the original maturity date was Dec. and you push it out to Feb. Their next flood insurance payment is due next April.

So, when the loan matures and they pay it off you have an escrow balance to refund customer.

What was accomplished?