[jsecor]

I need clarification on the new January 2016 flood escrow requirements and if we are exempt. We currently escrow five years for HPMLs and for anyone who wants to escrow on a voluntary basis. In reading through the flood escrow requirements I thought we qualified for the exemption. However; in a couple of presentations I have listened to they are stating that if you didn’t qualify for 1026.35(b)(2)(iii) HPML exemption you don’t qualify for the new flood escrow exemption. Is this correct? We didn’t take the small lender exemption of HPMLs because we didn’t feel like we qualified due to part D. Now I’m thinking we are not going to qualify for the exemption on flood escrows?

[rcooper]

You need to look to the requirements laid out in flood rules. If you meet those then you qualify for flood escrow exception.

Small lender exception. (1) Qualification. Except as may be required under applicable State law, paragraphs (a), (b), and (d) of this section do not apply to a bank:
(i) That has total assets of less than $1 billion as of December 31 of either of the two prior calendar years; and
(ii) On or before July 6, 2012:
(A) Was not required under Federal or State law to deposit taxes, insurance premiums, fees, or any other charges in an escrow account for the entire term of any loan secured by residential improved real estate or a mobile home; and
(B) Did not have a policy of consistently and uniformly requiring the deposit of taxes, insurance premiums, fees, or any other charges in an escrow account for any loans secured by residential improved real estate or a mobile home.

There is a discussion of the small lender exception beginning on p. 43 of the preamble.https://www.federalreserve.gov/newsevents/press/bcreg/bcreg20150622a1.pdf

[jsecor]

Thank you for the help Robin.

[Author]

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