Escrow Requirements for Manufactured Home

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Question:

The bank makes a loan for the purchase of a manufactured home. The home will be placed on a pad in a park, which will be leased from the park owner, i.e., the bank does not have a lien on real estate. As I understand it, if the loan meets the criteria for a higher priced mortgage loan, beginning on 10/1/10, the bank must establish an escrow account for property taxes and premiums for mortgage-related insurance related to the loan. As RESPA does not apply to this loan, what, if any, escrow requirements apply (i.e., calculation of escrow cushion, annual escrow analysis, etc.)?

Answer:

The HPML escrow requirements are required by Section 226.35 and they are not dependent on the loan being subject to RESPA. If you review the Commentary to Section 226.35, it will give examples of items that would be required to be escrowed. In this case, there is most likely personal property or some other tax due on the mobile home; therefore, you would have to escrow for those taxes in addition to the hazard insurance. RESPA escrow rules would not apply if the loan is not subject to RESPA.

First published on BankersOnline.com 8/23/10