Q: What transactions are subject to the Escrow Closing Notice requirement?
A: The Escrow Closing Notice must be provided prior to cancelling an escrow account to any consumers for whom an escrow account was established in connection with a closed-end consumer credit transaction secured by a first-lien on real property or a dwelling, except for reverse mortgages. As defined by Regulation Z, a dwelling includes, but is not limited to, a mobile home or a cooperative unit. (§§ 1026.20(e)(1), 1026.2(a)(19))
There are two exceptions to the requirement to provide the notice:
Creditors and servicers are not required to provide the notice if the escrow account that is being cancelled was established solely in connection with the consumer’s delinquency or default on the underlying debt obligation. (Comment 20(e)(1)-2)
Creditors and servicers are not required to provide the notice when the underlying debt obligation for which an escrow account was established is terminated, including by repayment, refinancing, rescission, and foreclosure. (Comment 20(e)(1)-3)
For purposes of this requirement, the term escrow account has the same meaning given to it as under Regulation X, 12 CFR § 1024.17(b), and the term servicer has the same meaning given to it as under Regulation X, 12 CFR § 1024.2(b).