Second Mortgage Escrow

Question:

Our bank is completing an application for a second mortgage closed-end loan. The annual percentage rate quoted on the loan resulted in the application being identified as a high-priced mortgage loan. Are we required to establish an escrow account for this transaction?

Answer:

No. The commentary to Section 1026.35(b)(3) requires creditors to establish an escrow account for payment of property taxes and premiums for mortgage-related insurance required by the creditor before the consummation of a loan secured by a first lien on a principal dwelling.