Escrow Required on Land Only Loan?

Answered by:

Question:

We have a request to renew an existing loan and add new money for repairs and improvements. Since it is a home equity, we would need to proceed with another new home equity. Presently, this loan is land only and was done as a home equity because a mobile home was later placed on this property for them to reside. Would we be required to escrow on this loan even though it is still considered land only?

Answer:

You don't say whether the new loan is secured by the mobile home, only that you still consider the loan a land only loan or if the loan is secured by a first or subordinate lien.

Since you are asking about having to escrow I will assume the loan would qualify as a HPML. Refer to 226.35(a)(1) for the loans subject to HPML requirements.

First published on BankersOnline.com 6/27/11