TILA Escrow Rule - What do I have to do to comply with this rule?

Compliance > Regulation Z - TILA > Escrow Rule, Eff. June 2013

Q:  What do I have to do to comply with this rule?

A:  You must establish and maintain escrow accounts for first-lien higher-priced mortgage loans for at least five years, subject to the requirements of the rule and any applicable exceptions. (See “What are the exemptions to the TILA Escrow Rule?” onpage 1 1.) 

This means that instead of being required to maintain mandatory escrow accounts for those loans until at least the one-year anniversary of origination (for instance, on September 1, 2014, for a loan originated on September 1, 2013), you will be required by this regulation to maintain the accounts until at least the five-year anniversary date (for instance, until at least September 1,    2018, for a loan originated on September 1, 2013). 

You must maintain the escrow account until one of the following occurs: 1) the underlying debt obligation is terminated or 2) after the five-year period, the consumer requests that the escrow account be canceled. However, if you are canceling the escrow account at the consumer’s request, the loan’s unpaid principal balance must be less than 80 percent of the original value of the property securing the underlying debt obligation, and the consumer must not be currently delinquent or in default on the underlying obligation – so if these conditions are not met, you will need to maintain the escrow account beyond five years. 

See Regulation X (12 CFR 1024.17(b)) for the definition of “escrow account.”

This can be found in the CFPB's TILA Escrow Rule, Small Entity Compliance Guide - http://www.consumerfinance.gov/regulatory-implementation/


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