If I understand.
- You have a first lien loan on one property.
- You have a home equity loan on another property.
- You are wanting to escrow for taxes, insurance, etc. for both properties through the first lien loan.
From section 1024.17 of the Bureau's Regulation X:
Escrow account means any account that a servicer establishes or controls on behalf of a borrower to pay taxes, insurance premiums (including flood insurance), or other charges with respect to a federally related mortgage loan, including charges that the borrower and servicer have voluntarily agreed that the servicer should collect and pay. The definition encompasses any account established for this purpose, including a “trust account”, “reserve account”, “impound account”, or other term in different localities. An “escrow account” includes any arrangement where the servicer adds a portion of the borrower's payments to principal and subsequently deducts from principal the disbursements for escrow account items. For purposes of this section, the term “escrow account” excludes any account that is under the borrower's total control.
However I'm not sure why a separate escrow account would not be established for each loan. This would eliminate any possibility of any confusion of what payment was for what property and if one loan paid off and the other didn't. But that is your decision to make.
I'm guessing that the lender's HELOC processing system (if I am interpreting "we have an equity" correctly) doesn't "do" escrows.
I was looking at it as a home equity loan and not a HELOC.
Having to make assumptions (in this case you and I made 2 different assumptions) because the questioner is not clear with their terms sometime presents issues with answering the question.
And, of course, depending on the system the equity LOAN is being processed on, there might not be an escrow capability there, either.