Escrow and HPML Modifications

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Question:

In a question that was posed to Patricia Cashman on 7-19-10 concerning HPML and modifications, she stated that escrow will not apply to a true modification. Could she please show me where that can be found in the regulation. I have looked and can't find this. I have this situation and I need more clarification.

Answer:

You have to review Reg Z's 226.20 and its Commentary.If the transaction does not meet the requirements of a refinancing, then there are no new disclosure requirements under Reg Z. In other words, it is not a new transaction subject to the provisions of Reg Z.

The exceptions are 1) if new money is being advanced secured by the consumer's principal dwelling, or a security interest if being added in the consumer's principal dwelling then the ROR will apply to the new money or security interest, and 2) if a variable rate feature or term that was not previously disclosed is added then the transaction would be considered a refinancing (a new transaction) and all new disclosures and current requirements of Reg Z would be required.

First published on BankersOnline.com 10/04/10