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Washington
Fed increases jumbo mortgage escrow threshold
WASHINGTON (4/11/11)--The Federal Reserve earlier this month increased the annual percentage rate (APR) threshold for determining whether a “jumbo” residential first mortgage would require establishment of an escrow account. The APR threshold, under Regulation Z, has been increased to 2.5% above the average prime offer rate (APOR) on similar “jumbo” mortgage products. However, the Credit Union National Association has noted that credit unions have the option to continue to follow the lower 1.5% above APOR threshold that applied prior to this change. So-called “jumbo” mortgages -– those that are too large to be sold to Fannie Mae or Freddie Mac -– are normally mortgages of $417,000 or more, but the minimum amount can be higher in jurisdictions with higher costs of living. The change was required by the Dodd-Frank Act, and became effective on April 1. For CUNA’s full final rule analysis on this issue, use the resource link.
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