New Escrow Requirements under the Truth in Lending Act 

Effective on June 1, credit unions were required to maintain an escrow account for first-lien higher-priced mortgage loans (HPMLs) for at least five years, unless eligible for exemption.

Certain transactions are exempt from the escrow account requirements, including open-end credit (such as home equity lines of credit) and subordinated liens. Additionally, some credit unions may qualify for an exemption to the final rule. To be eligible for the exemption, a credit union must meet four conditions:

  1. Made 500 or fewer first lien mortgages, together with any affiliate, during the preceding calendar year;
  2. Had less than $2 billion in total assets, as of December 31 of the preceding year;
  3. Originates more than half of its first lien mortgages in a rural or underserved area; and
  4. Does not escrow for any mortgage obligation currently serviced by the credit union or an affiliate.

For further information on the criteria for an exemption and more information on the new escrow requirements, you can read the NCUA’s Regulatory Alert 13-RA-05 here.


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