The Board issued a final rule to revise the escrow account requirements for higher-priced, first-lien “jumbo” mortgage loans. This rule implements a Dodd-Frank provision that increases the APR threshold used to determine whether a mortgage lender is required to establish an escrow account for these kinds of mortgages to 2.5 percentage points or more above the applicable prime rate offer. The final rule is effective for covered loans originated based on applications received on or after April 1, 2011.
While we are on the subject of escrows, the Board also proposed a rule to increase the minimum period for mandatory escrow accounts for first-lien, higher-priced mortgage loans to five years. In certain circumstances, including delinquency or default, the mandatory escrow period would be longer. The rule would require disclosures explaining how the escrow account works and disclosures three days before an escrow account is closed. The 60-day comment period begins when the proposed rule is published in the Federal Register. For all the details see our Client Alert at: http://www.mofo.com/files/Uploads/Images/110303-Final-Rule-Escrow-Accounts.pdf.