Abstract: Recent amendments to Regulation Z by the Federal Reserve Board are now being implemented under the Home Ownership and Equity Protection Act (HOEPA). The final rule has clearly defined new protections for higher-priced mortgage loans including an escrow account requirement effective April 1, 2010, with the effective date being extended to October 1, 2010 for manufactured homes. These new requirements will apply to all mortgage lenders and not only those examined by the Federal Reserve
HOEPA will now require lenders to set up an escrow account for property taxes and homeowner's insurance on first-lien mortgages categorized as being higher-priced, for a period of no less than one year from the date of the loan. After this one year period, the borrower may choose to cancel the escrow account by notifying the lender; however, the cancellation will be at the discretion of the lending institution. In addition, lenders will be required to verify the borrower's ability to repay the loan and ban prepayment penalties for all loans in which the payment can change within four years. For all other higher-priced loans, prepayment penalty periods will be restricted to two years.
The Federal Reserve Board defines a higher-priced mortgage loan as a consumer loan which is secured by the borrower's principle dwelling with an APR exceeding the average prime offer rate, an index published by the FRB. Higher-priced mortgage loans will consist of first-lien mortgages with an APR of 1.5 percentage points or greater than the index and subordinate mortgages with an APR of 3.5 percentage points or greater than the index.
United One Resources can offer a solution which provides current tax information to aid in the establishment of new escrow accounts. This information can also be provided at no cost to the lender when United One Resources is chosen as the title insurance provider! For more information on our tax information solutions and title insurance services, please contact Stephanie Wasmanski directly or visit our website at www.unitedoneresources.com.
Published on Tuesday, September 08, 2009