CFPB ISSUES NPRM ON HPML ESCROW EXEMPTION

On July 2, 2020, the Consumer Financial Protection Bureau (CFPB) published a Notice of Proposed Rulemaking (NPRM) to amend Regulation Z, which implements the Truth in Lending Act, as mandated by section 108 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The amendments would exempt certain insured depository institutions and insured credit unions from the requirement to establish escrow accounts for certain higher-priced mortgage loans.

In the 2018 EGRRCPA, Congress required the CFPB to issue regulations to add a new exemption from TILA’s escrow requirement that exempts transactions by certain insured depository institutions and insured credit unions.

  • The proposed rule would implement the EGRRCPA section 108 statutory directive, and would also remove certain obsolete text from the Official Interpretations to Regulation Z.
  • New § 1026.35(b)(2)(vi) would exempt from the Regulation Z HPML escrow requirement any loan made by an insured depository institution or insured credit union and secured by a first lien on the principal dwelling of a consumer if
    • The institution has assets of $10 billion or less;
    • The institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and
    • Certain of the existing HPML escrow exemption criteria are met.

The NPRM has a 60-day comment period.

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