Change Purpose (Consumer to Business) HPML?

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Question:

Scenario: Consumer purpose balloon loan that was originally the borrower's primary residence and fell into the HPML category. The borrower no longer resides in the property and it is now a rental. Since the purpose has changed from consumer to business, do HPML rules still apply? Can we cancel the escrow account? FYI-we are still within 12 months of origination.

Answer:

Not unless it involves a refinance. You can't change the purpose of a loan midstream.

First published on BankersOnline.com 3/11/13