CFPB issues rule on HPML escrow exemption

The CFPB has issued a final rule amending section 1026.35 of Regulation Z to implement a requirement of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The final rule exempts certain insured depository institutions and insured credit unions from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs).

The rule will take effect on publication in the Federal Register. It exempts from the 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 (1) the institution has assets of $10 billion or less; (2) 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; and (3) certain of the existing HPML escrow exemption criteria are met (one or more covered first-lien-secured transactions in a rural or underserved area in the prior year, and no escrow accounts maintained on real estate secured consumer credit other than escrow accounts established for first-lien HPMLs for which applications were received on or after April 1, 2010, and before 120 days after publication of this rule (see publication update below); or escrow accounts established after consummation as an accommodation to distressed consumers to assist such consumers in avoiding default or foreclosure).

• Press release
• Publication and effective date update: Published and effective on February 17, 2021. The 120-day period following publication ends June 17, 2021.