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#2051911 - 12/01/15 08:28 PM Multiple Properties - Escrow Requirements
MAFCCons Offline
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We are working with 4 applicants to purchase a primary residence. Two of the applicants (Husb/Wife) will live in the home. In order to meet loan to AV standards, parents (other 2 applicants) are pledging a 2nd lien on a farm they own - not their primary residence. The loan is subject to HPML and escrows. I know we have to escrow on the new property being purchase but do we have to escrow on the 2nd property as well? Or is the 2nd property exempt because under normal requirements a loan against that property would not be escrowed?

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Escrows on Higher-Priced Mortgages
#2051913 - 12/01/15 08:37 PM Re: Multiple Properties - Escrow Requirements MAFCCons
John Burnett Offline
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John Burnett
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You are not required to escrow for the property on which you will hold a junior lien.
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#2051940 - 12/01/15 09:42 PM Re: Multiple Properties - Escrow Requirements MAFCCons
Dan Persfull Offline
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Bloomington, IN
Nor are you required to escrow on on a property that is not the consumer's primary dwelling.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2051948 - 12/01/15 09:55 PM Re: Multiple Properties - Escrow Requirements MAFCCons
MAFCCons Offline
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Thank you! I was second guessing myself that since the 1st lien qualifies it for HPML/escrow then any property taken as collateral would fall under that no matter the position. I appreciate the clarification.

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#2164965 - 02/16/18 05:22 PM Re: Multiple Properties - Escrow Requirements MAFCCons
Funky Falcon Offline
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Minnesota
I have a somewhat similar situation that I am questioning, so I'd like to resurrect this thread.

Husband and wife are purchasing a primary residence. Mom and dad are going to be joint borrowers and are pledging a 1st lien on their primary dwelling as additional collateral. Now we have two houses, both with 1st liens, and both primary dwellings.

Do we have to escrow for both properties?

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#2165222 - 02/20/18 08:54 PM Re: Multiple Properties - Escrow Requirements MAFCCons
Dan Persfull Offline
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Bloomington, IN
In my opinion yes.

All persons that are joint borrowers meet the definition of a consumer under the regulation therefore you have a first lien in the consumer(s) primary residence(s).
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#2166871 - 03/06/18 04:54 PM Re: Multiple Properties - Escrow Requirements MAFCCons
Funky Falcon Offline
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Minnesota
What if mom and dad are "co-signers" guaranteeing the loan rather than "co-borrowers" - would we still need to escrow on their primary dwelling if we take a 1st lien as additional collateral?

Reg. Z says that guarantors are not generally consumers for purposes of the regulation, so does that mean the escrow rules for the collateral they're pledging wouldn't apply?

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#2166903 - 03/06/18 07:20 PM Re: Multiple Properties - Escrow Requirements MAFCCons
Dan Persfull Offline
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Bloomington, IN
Co-signers and guarantors are not the same.

Co-signers sign the note and are directly liable for the obligation.

Guarantors sign a separate guaranty agreement and are indirectly liable on the debt. In most cases you cannot collect from the guarantor until the loan goes into default.

The regulation under 1026.2 doesn't specifically distinguish between a co-signer and a guarantor but since it does specifically refer to a guarantor I would have to opine a co-signer would not be exempt from the definition of a consumer.
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#2173439 - 04/13/18 05:19 PM Re: Multiple Properties - Escrow Requirements MAFCCons
Compliance NABW Offline
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I agree with Dan. I have a slightly different scenario, but I don't think it makes a difference. In the scenario above, what if the husband and wife are borrowers on the note and live in the home as their primary residence, but do not have an ownership interest in the home they live in? Only the "Mom and Dad" have ownership interests in my scenario. It seems that the Reg. only refers to the "consumers (borrowers) principal dwelling that secures the loan." It doesn't seem to require the consumer to actually have an ownership in said principal dwelling.

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#2173539 - 04/13/18 09:37 PM Re: Multiple Properties - Escrow Requirements MAFCCons
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Also, how about the Right of Rescission? Seems like this would apply to all parties as well, or just the parents? Do you exclude out the "husband and wife" because their principal dwelling is being acquired as part of a residential mortgage transaction?

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#2173721 - 04/16/18 08:02 PM Re: Multiple Properties - Escrow Requirements MAFCCons
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
If you are referrring to the above scenario the kids would not have rescission rights beacuse of the reason you state.
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#2173723 - 04/16/18 08:17 PM Re: Multiple Properties - Escrow Requirements MAFCCons
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Well, in the original scenario, they "kids" would not have an ownership interest in the purchased dwelling, so no RoR for sure. But, switch it up a bit and let us say the kids will have an ownership in the purchased property. You would say that piece gets the "Residential Mortgage Transaction" exemption?

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#2173726 - 04/16/18 08:21 PM Re: Multiple Properties - Escrow Requirements MAFCCons
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Husband and wife are purchasing a primary residence. Mom and dad are going to be joint borrowers and are pledging a 1st lien on their primary dwelling as additional collateral. Now we have two houses, both with 1st liens, and both primary dwellings.

Tha only one with rescsission rights in this scenario is mom & dad.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2173736 - 04/16/18 08:59 PM Re: Multiple Properties - Escrow Requirements MAFCCons
Compliance NABW Offline
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Sounds good. Thank you.

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