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Hi Jack,
If we make a consumer real estate loan, secured with a Second Mortgage on the principal dwelling and the funds will be used to pay off a Sallie Mae student loan, would this loan be considered a Private Education Loan or just a consumer 2nd mortgage real estate? This customer is no longer in school and has been making P&I payments to Sallie Mae for about 10 years.
If it’s considered a second mortgage consumer real estate, I understand Reg Z, Respa, Right of Recission, etc would apply. How would we handle the GFE/HUD concerning the property taxes and homeowners insurance amounts? I assume we will still need to disclose those amounts on those documents. If the loan ends up as a higher priced mortgage, being this is a second mortgage, escrow would not be required. Please advise me if I am incorrect.
Thanks!
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