CFPB Lengthens Time For Mandatory Escrow Accounts For Certain Loans


 (OnlineEd® – Portland, OR) Starting June 1, 2013 the Consumer Financial Protection Bureau (“CFPB”) will require certain lenders to start collecting monthly escrow payments from certain mortgage loans, for at least the first five years. This new rule applies to certain “higher-priced” mortgage loans that have a rate based on points, interest, and other loan terms higher than levels set in the rule. The rule, however, does not apply to all lenders.

Lenders meeting these four conditions, generally, do not have to comply with the rule:

  1. If the lender makes fewer than 500 mortgages a year;
  2. If the lender has assets less than $2 billion;
  3. If the lender usually does not hold escrow accounts for any of its current mortgage customers; and
  4. If the lender lends mostly in rural areas or other places where customers have a hard time finding mortgages.

Lenders planning on selling a mortgage to another company that does not meet the four requirements will have to establish an escrow account for loans covered by the rule.

The rule amends Truth in Lending (Regulation Z) and implements amendments made by the Dodd-Frank Wall Street Reform Consumer Protection Act by lengthening  the time for a mandatory escrow account established for a higher-priced mortgage loan secured by a first lien on a principal dwelling. The rule applies to transactions for which creditors receive applications on or after June 1, 2013.


For more information about this change, please visit the Consumer Financial Protection Bureau. To keep up to date on changes to the mortgage and real estate industries, please visit OnlineEd® and enroll in their Club-O program. For compliance management and education for your mortgage company, visit InlineEd.

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About Jeff Sorg

Jeff Sorg holds vocational and post-secondary school instructor licenses in several states and has authored numerous real estate continuing education and pre-licensing courses. Sorg is awarded the International Distance Education Certification Center's CDEi Designation for distance education. Memberships include ARELLO (Association of Real Estate License Law Officials), REEA (Real Estate Educators Association) the National Association of REALTORS®, Oregon Association of REALTORS®, and Portland Metro Association of REALTORS®. Awards and service include REALTOR® Emeritus; Life Member award; 2020, 2021, 2022 Chairperson of the Oregon Real Estate Forms Committee; Oregon REALTORS State Director. More on request.