NCUA issued a Regulatory Alert (21-RA-05) last week that covers the Consumer Financial Protection Bureau's (CFPB) February 17 final rule expanding the exemption from establishing escrow accounts for higher-priced mortgage loans (HPMLs). CUNA supported the final rule.
The final rule became effective February 17. Qualifying institutions that have established HPML escrow accounts on or after April 1, 2010, will have 120 days after the effective date of the final rule to cease providing escrows for HPMLs to take advantage of the new exemption.
The HPML provisions of Regulation Z require that a creditor establish an escrow account for certain first-lien HPMLs. While the HPML provisions include an exemption for small creditors operating in rural or underserved areas that meet certain requirements, the exemption under the statute is an additional exemption for qualifying insured credit unions. Insured credit unions that meet all of the following qualify for the exemption:
Even if an insured credit union qualifies for the exemption from the escrow account requirement, if, at consummation, the transaction is subject to a forward commitment for sale to a purchaser that does not qualify for an exemption from the escrow account requirement, an escrow account is required under the HPML provisions, unless the transaction is otherwise exempt from the requirement.