HPMLs/ part of reg Z

HPMLs/ part of reg Z

1. Also know as sec 35

   • Appraisial Requirements
     • Safe Harbor
       • Orders the appraiser to perform the appraisal in compliance with USPAP and FIRREA
         • Uses the National Registry to verify that the appraiser is certified or licensed in the state where the appraised property that is securing the loan is located
           • Confirms that the written appraisal meets each of the requirements of Appendix N
             • Has no knowledge contrary to the facts of certifications contained in the appraisal
     • Creditor must provide a disclosure no later then the 3rd business day
       • Creditor must provide the completed appraisal no later then 3 business days prior to consummation
         • NO FEES for appraisal copies
           • Sometimes 2 appraisals are required to curb the practice of property flipping

2. Higher Priced Mortgage Loans

3. Escrow accounts

   • Must be established and maintained for a minimum of five years
   • Escrow not required for subordinate lien HPMLs, A transaction secured by shares in a cooperative, a transaction to finance the initial constuction of a dwelling, a reverse mortgage, open-end credit, insurance premiums purchased by the consumer and not required by the creditor

4. Applies to closed end loans that are secured by the borrower's principal dwelling that surpass a given threshold

5. Small Creditor Expemtion

   • Qualifications
     • During any of the 3 preceding years, the creditor extended more than 50% of covered transactions secured by a first lien on residential real property in countries qualified as "rural" or "underserved"
       • The combined first-lien originations of the creditor and its affiliates did not exceed 500 loans during the preceding calendar year
         • At the end of the preceding calendar year, the creditor had assets worth less the $2 billion
           • Neither the creditor nor its affiliates maintain an escrow account for any extension of consumer credit secured by real property or a dwelling that the creditor or its affiliate currently services