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Escrow for Taxes & Insurance (Flood)

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Question: 
Our bank escrows and when the loan is a Higher Priced Mortgage Loan (HPML) we do escrow for taxes and insurance including flood insurance if in place. When a loan is not an HPML and the customer does want to escrow, is it acceptable to escrow just for taxes? Our borrower requested this as they do not want to escrow for their homeowner's insurance. I have reviewed 1024.17 - the escrow will be added to the loan documents and disclosures provided - so it will not be under the borrower's total control. I just wanted to verify that we should escrow for both taxes and insurance in this situation, even if escrow is not required.
Answer: 

Unless you are required to escrow under Section 35, you can escrow for whatever items that are agreeable between you and the consumer.

First published on 04/12/2020

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