§ 1026.35(a)(1):
"Higher-priced mortgage loan" means a closed-end consumer credit transaction secured by the consumer's principal dwelling with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set:
(i) By 1.5 or more percentage points for loans secured by a first lien with a principal obligation at consummation that does not exceed the limit in effect as of the date the transaction's interest rate is set for the maximum principal obligation eligible for purchase by Freddie Mac;
(ii) By 2.5 or more percentage points for loans secured by a first lien with a principal obligation at consummation that exceeds the limit in effect as of the date the transaction's interest rate is set for the maximum principal obligation eligible for purchase by Freddie Mac; or
(iii) By 3.5 or more percentage points for loans secured by a subordinate lien.
There is no further qualification concerning an exemption for the dwelling taken as "additional" security, unless you're taking a
junior lien on that principal dwelling. I'd say you have an escrow requirement if the loan meets the criteria for an HPML.
That escrow would be for payment of property taxes and for premiums for hazard or property ownership insurance on Dad's home -- if the bank requires such insurance coverage.
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