HPML, escrow, short term

We have a work out situation where the HPML will be for a term of 4 months. Is there any exception to the escrow rules for short term loans?

If it is work-out loan, would it not be exempt under 226.20?

Not sure I follow what you are saying. It's a refinance, new note, new rate, etc. 226.20 references the need for new disclosures, but is silent on the escrow issue.

I guess what Randy is saying is why don't you just modify or extend this loan if it's only for four months? That way, you avoid all the disclosure headaches, plus it would be a whole lot cheaper, would it not? Is there some compelling reason you have to refi this loan? But if you insist on a full-on refi, I see no exception to the HPML rules for short term financing.

Good luck.

Thanks, I'm not seeing an out for escrow on short term loans either.

Did you increase the rate or extend new money??

Paragraph 20(a)(4).

1. Workout agreements. A workout agreement is not a refinancing unless the annual percentage rate is increased or additional credit is advanced beyond amounts already accrued plus insurance premiums.

Thanks Randy, I think rate is increasing, amount is okay under this paragraph.

So then I have to make the leap that if it is not a refi, HPML rules do not apply, hence escrow rules do not apply. Right?

Correct, if it falls under one of the exemption, then no part of Reg. Z will apply. If they are increasing the rate, then you are out of luck.