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Small Lender Exception

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Our bank does not set up escrow accounts for any loans that we keep in our portfolio other than HPML loans; however, we do establish escrow accounts for our secondary market investors before transferring the loan and escrow to them. Does this disqualify us from being able to utilize the small lender exception under the flood requirements?

If the escrow account is established for a loan that is transferred to a secondary market investor the bank typically is not considered to have a practice of consistently and uniformly requiring escrows. The escrow account needs to be transferred to the investor “expeditiously” to avoid being disqualified from utilizing the small creditor exemption.
Learn more about Jack Holzknecht’s webinar
2018 What’s All the Fuss About Escrows

First published on 03/25/2018

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