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CFPB Finalizes HPML Escrow Exemptions

3/11/2021 - By Janet Munns, CRCM

The Consumer Financial Protection Bureau (CFPB) issued a final rule amending the higher-priced mortgage loan (HPML) escrow rule. The final rule exempts certain insured depository institutions and insured credit unions from the requirements to establish escrow accounts for HPMLs.

The final rule takes effect upon publication in the Federal Register and exempts from the HPML escrow requirement any loan made by an insured depository institution or 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 for the preceding year;
  • 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;
  • The institution originated at least one covered transaction secured by a first lien on a property located in a rural or underserved area in the preceding calendar year*; AND
  • The institution does not currently escrow for mortgage loans.

If the institution meets all of these requirements, the regulation exempts the institution from the escrow requirements for HPML loans.

*Link to 2020 rural or underserved list published by CFPB for your respective state/counties

Staying in compliance can be challenging, if you have any questions or need assistance preparing for these new CFPB rules, email me or a member of our Financial Institutions Team so we can help.

ABOUT THE AUTHOR | Janet Munns, CRCM
Janet is a consultant in the Financial Institution Advisory Group of Saltmarsh, Cleaveland & Gund. Her primary areas of expertise include loan compliance reviews, secondary market lending operations internal audits, and HMDA data integrity reviews. Janet has over thirty years of diverse banking experience, focused in the areas of regulatory compliance, banking operations and development of policies and procedures.


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