2. CFPB introduces Escrow Requirements amending Reg. Z January 10, 2013 Effective Date: June 1, 2013

3. Definitions: Higher Priced Mortgage Loan – A closed-end loan secured by a principal dwelling with an APR that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set.

4. Definitions: APR Difference from Average Prime Offer–  An APR 1.5% or more higher than the average prime rate offer for principal amounts that do not exceed Freddie Mac limits;  By 2.5% or more for principal amounts that exceed Freddie Mac limits; or  By 3.5% or more for loans secured by subordinate liens.

5. Definitions: Dwelling – Structures that are classified as personal property under State law: Manufactured homes, boats, and trailers.

6. Definitions: Average Prime Rate Offer – Annual percentage rate derived from average interest rates, points, and other loan pricing terms currently offered to consumers by a representative sample of creditors for mortgage transactions that have low-risk pricing characteristics.

7. Escrow Account Requirements Escrow account must be established and maintained for a minimum of 5 years.

8. Mandatory Escrow Requirements  Property taxes,  Hazard insurance,  Liability insurance, and  Private mortgage insurance. Insurance

9. Exempt Mortgage Products  Reverse mortgages,  Loan transactions secured by shares in a cooperative,  Construction loans, and  Bridge loans.

10. Community Association Exemption Escrow only required for property tax, not hazard insurance premiums.

11. Small Credit Union Exemption 1.Asset size less than $2 billion; 2.Make more than half first-lien mortgages in rural or underserved areas during the previous calendar year; 3.Together with its affiliates, originated 500 or fewer first-lien mortgages during the preceding calendar year; and 4.Together with its affiliates, not escrow for any mortgage it or its affiliates currently services, except in limited instances.

12. Rural Area: County is not in a metropolitan statistical area or in a micropolitan statistical area that is adjacent to a metropolitan statistical area. Underserved Area: County HMDA data reports that no more than two creditors extend covered transactions secured by a first lien, five or more times in the past year.

13. Member Escrow Cancelation Loan is paid off; or Member requests termination:  5 years after loan origination;  80% or less loan to value; and  Member is not delinquent.

14. Thank you for joining me for this overview of the Compliance Outlook. Stay Tuned……..