Escrow Rules

Effective June 1, 2013 / Effective January 1, 2014 credit unions must establish and maintain escrow accounts for first-lien higher-priced mortgage loans for at least 5 years.

A higher-priced mortgage loan (HPML) is:

  • First lien mortgage with APR 1.5% or more over the APOR.
  • First lien mortgage with an APR 2.5% or more over the APOR if the principal amount exceeds Freddie Mac’s limit for mortgages it will purchase in effect as of the date the interest rate is set for the transaction (“jumbo loan”).

Small Creditor Exemption

  • More than half of loans made to members in rural or underserved counties.
  • Your credit union, together with affiliates do not originate more than 500 first lien covered transactions in the preceding calendar year.
  • Less than $2 billion in assets.
  • The credit union and affiliates cannot maintain escrows on any loans serviced.

*The CFPB will extend eligibility for the rural or underserved exemption from the escrows requirement to creditors that operated predominantly in rural or underserved counties in any of the previous three years. Under this proposed change, creditors that operated predominantly in rural or underserved counties in 2012 (and also meet the other criteria and thus are eligible for the exemption during 2013) would not lose eligibility during 2014 as a result of any differences between the 2013 list and the 2014 list that we are posting today (or in 2015 if a county’s status changes next year).


Escrow Requirements of Regulation Z

Back to CFPB Mortgage Compliance Center


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