[jeffcumbee]

How do you handle the escrow requirements for HPML’s in 1026.35(b)(1) for an Amish or Mennonite borrower who is part of a Mutual Aid Society or “Amish Aid”? I have looked through the exemptions in the regulation and it does not mention this situation, that I can find. We can get a statement from the leaders of their church that they are indeed “covered” by the aid. Is this enough to show evidence? I am wondering if anyone else has encountered this situation and has any suggestions or any critiques from examiners. Thanks!

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[rcooper]

Reg Z, 1026.35(b)(1) says:
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.

If you aren’t requiring hazard insurance because the borrower is covered under the mutual aid society then you would not be required to escrow for hazard insurance premiums. (Note: This would not extend to premiums for flood insurance required under federal law.) You would be required to escrow for property taxes.

[Author]

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