Escrow Decline Notice: 1 or 5 Years?

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Question:

We are an Illinois national bank with a consumer home mortgage loan made in July 2010. The loan has an escrow account and the balance in now paid down 65% of the original note amount. Do we need to send the Illinois Escrow Decline Notice (IED) now or wait until it is 5 years old? Previously we sent IED notices after one year - now its 5 years. BTW, the account does not have any other defaults.

Answer:

The five-year minimum duration for escrow accounts on HPMLs under Regulation Z section 1026.35 applies to mortgages for which applications were received on or after June 1, 2013. The loan you've described would continue to be subject to the older rule, which imposed the one-year minimum escrow account term.

Unless Illinois law says differently, you should be able to send that notice now and terminate the escrow account.