Is there some hard fast Reg or Rule that states we MUST escrow if 1st lien and greater than 1 year?

Lending compliance is not my area of expertise...

Thanks.

35(b)(1) Requirement to escrow for property taxes and insurance.
ADMINISTRATION OF ESCROW ACCOUNTS.
Section 1026.35(b)(1) requires creditors to establish an escrow account for payment of property taxes and premiums for mortgage-related insurance required by the creditor before the consummation of a higher-priced mortgage loan secured by a first lien on a principal dwelling.

See this link for exemptions:
https://www.consumerfinance.gov/eregulations/1026-35/2013-30108_20150718#1026-35-b

The Flood Insurance regulations also require an escrow account for flood insurance premiums and fees unless an exemption applies.