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CFPB proposes EGRRCPA-required HPML escrow exemption

The CFPB has issued a notice of proposed rulemaking that would amend Regulation Z to provide a new exemption available to certain insured depository institutions and insured credit unions from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs), to implement an amendment to Regulation Z made by section 108 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).

The proposed amendment generally would exempt from the Regulation Z HPML escrow requirement any loan made by an insured depository institution or insured credit union and secured by a first lien on the principal dwelling of a consumer if

  • the institution has assets of $10 billion or less;
  • the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year;
  • the institution meets the requirement in § 1026.35(b)(2)(iii)(A) relating to making a covered transaction secured by a first lien on a property located in a "rural" or "underserved" area; and
  • the institution and its affiliates do not maintain an escrow account other than those established for HPMLs at a time when the creditor may have been required by the regulation to do so or those established after consummation as an accommodation to distresses consumers.

Comments on the proposal will be accepted for 60 days following Federal Register publication.

Published 7/22/2020 with comments due 9/21/2020.

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