Alert January 22, 2013

CFPB Finalizes Rule on Escrow Requirements for “Higher-Priced” Mortgages

The CFPB also separately finalized the rule on escrow requirements for higher-priced mortgages. The rule changes the escrow maintenance provisions and now requires creditors to establish and maintain escrow accounts for at least 5 years after originating a higher-priced mortgage loan.

Importantly, the rule exempts small creditors that meet certain conditions, such as operating predominantly in a rural or underserved areas and originating 500 or fewer yearly first-lien mortgages, from the escrow requirement. The CFPB also released a detailed summary of the rule, which becomes effective June 1, 2013.