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CUNA seeks extended escrow compliance deadline
WASHINGTON (10/26/10)--The Credit Union National Association (CUNA) has requested that the Federal Reserve (Fed) give lenders an additional six to twelve months to comply with a proposed rule that would revise the escrow account requirements for “higher-priced,” first-lien “jumbo” mortgage loans. The compliance deadline extension, which would be effective after the Fed releases the final version of its rule in the Federal Register, would be “especially important for credit unions and others that rely on third parties, such as software vendors,” CUNA said. The extended implementation time “will be especially important at this time since lenders and their vendors are preparing for other changes, such as the disclosures changes required under the Mortgage Disclosure Improvement Act that will be effective as of Jan. 30, 2011,” CUNA added. “These third parties will need time to incorporate the necessary updates, complete the necessary testing, and then include this change into their regularly scheduled releases,” the comment letter said. Overall, CUNA added, the escrow provision would be helpful, as it would “relieve credit unions and other lenders from complying with the escrow account requirements for first-lien jumbo loans that are between 1.5 and 2.5 percentage points above the applicable average prime offer rate. The Fed rule would increase the annual percentage rate (APR) threshold used to determine whether an escrow account is required for property taxes and insurance for first-lien jumbo mortgages, which are defined as those exceeding the Freddie Mac and Fannie Mae conforming loan size thresholds. The escrow account requirement would apply to first-lien jumbo loans only if the loan APR is 2.5 percentage points or more above the applicable APOR, instead of the 1.5 percentage points as originally required by the current rules. For the full release, use the resource link.


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