As previously announced in http://www.docutechcorp.com/the-june-2013-cfpb-regulations, the data integrity messages in ConformX have been updated for Higher-Priced Mortgage Loans without an escrow account. Prior to June 1, 2013, there were two messages that could potentially display for Higher-Priced Mortgage Loans that did not have an escrow account established. This message would trigger for non-Jumbo HPML loans when applicable:
“This loan is an HPML. Reg Z, Section 35, requires the lender to establish an escrow account for the payment of property taxes and homeowner’s insurance for first lien Higher Priced Mortgage Loans.”
And this one for Jumbo HPML loans when applicable:
“This loan is a Jumbo HPML loan. Reg Z, Section 35, requires the lender to establish an escrow account for the payment of property taxes and homeowner’s insurance for first lien Jumbo Higher Priced Mortgage Loans when the APR is 2.5 or more percentage points greater than the applicable average prime offer rate.”
The wording of both of these data integrity error (a.k.a. “hard-stop”) messages has been updated to the following:
“This loan is a Higher Priced Mortgage Loan under Regulation Z. Federal law requires the establishment of an escrow account for the payment of property taxes and/or insurance. For loans with an application date before 6/1/13 the escrow account must be maintained for at least one year, for loans with an application date on or after 6/1/13 the escrow account must be maintained for at least five years.”
As also previously announced, the cooperative exemption in §1026.35(b)(2)(A) has been added to these data integrity rules, since cooperatives are excluded from the HPML escrow requirement:
“(2) Exemptions. Notwithstanding paragraph (b)(1) of this section:
(i) An escrow account need not be established for:
(A) A transaction secured by shares in a cooperative;
(B) A transaction to finance the initial construction of a dwelling;
(C) A temporary or “bridge” loan with a loan term of twelve months or less, such as a loan to purchase a new dwelling where the consumer plans to sell a current dwelling within twelve months; or
(D) A reverse mortgage transaction subject to § 1026.33(c).”
New Construction loans and bridge loans with terms of twelve months or less were already being excluded and reverse mortgages are not supported in ConformX, so no changes were needed to the ConformX HPML escrow account data integrity checks for §1026.35(b)(2)(B-D).
Interthinx, the third party vendor who provides HCL/Pred Check testing through ConformX, has already updated their tests to reflect the new HPML requirements effective June 1, 2013.
For more information on the new Higher-Priced Mortgage Loans Rule changes and the other CFPB Regulation changes effective in June 2013, please see http://www.docutechcorp.com/the-june-2013-cfpb-regulations.
*Please note the “Single-Premium Credit Insurance” changes originally scheduled for June 2013 have been postponed by the CFPB.
The changes to the ConformX HPML escrow account data integrity checks detailed above took effect on June 1, 2013. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
June 3, 2013
TW 74310