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A question we received from one of our members:
We have a customer that has a lot that we have a lien on. He was going to build a house on the lot. Now he is just going to purchase a mobile home to place on the lot. Are we still required to escrow since the new loan will not include the real estate only the mobile home?
Yes, you will still need to escrow if it is an HPML.
1026.35(b) states: Except as provided in paragraph (b)(2) of this section, a creditor may not extend a higher-priced mortgage loan secured by a first lien on a consumer’s principal dwelling unless an escrow account is established before consummation for payment of property taxes and premiums for mortgage-related insurance required by the creditor, such as insurance against loss of or damage to property, or against liability arising out of the ownership or use of the property, or insurance protecting the creditor against the consumer’s default or other credit loss.
1026.2(a)(19) give the general definition of dwelling for Reg Z: Dwelling means a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.
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Jack’s Compliance Resource MarketplaceI recently received the following question, “Does the requirement to wait five years, instead of one year to cancel an escrow apply to new loans or to new and previously existing loans?”
Answer: The rule is effective June 1, 2013. Its requirements apply to transactions for which creditors receive applications on or after that date
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