[TheBank]

Would it be in compliance, for subordinate lien consumer closed end mortgages, to use the actual escrow amount in cases where the borrower has a mortgage statement on their 1st mortgage?

If instead we estimated the taxes and insurance and that amount is slightly less than the 1st mortgage statement escrow, and carried this figure through from the LE to the CD would that be an issue?

We would have complied with Reg Z by estimating based on the tax card and insurance policy, but with the CD needing an actual amount and insurance estimate for the LE, should we reflect what the 1st mortgagee is collecting, which would be affected by the cushion.

[jholzknecht]

If taxes and insurance are adequately escrowed under a first mortgage then there is no need to disclose an escrow on a subordinate lien transaction. If at the time the LE is prepared no knowledge of the first lien exists then estimates for taxes and insurance should be provided.

[Author]

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