Credit Union Regulatory Alert  

Published by Howard & Howard Attorneys PLLC

Greetings! 

  

Thank you for taking the time to read this Howard & Howard Credit Union Regulatory Alert. We aim to provide our credit union clients and friends with information to help you understand and interpret the ever-changing regulatory environment.

 

Be sure to review the links to our past Regulatory Alerts below the main article. And, of course, new readers can sign-up for our free e-Alerts here.  

CFPB Requires New 

Escrow Closing Notice


While the Loan Estimate and Closing Disclosure have deservedly received the most attention, the Consumer Financial Protection Bureau's Integrated Mortgage Disclosure rule also requires an Escrow Closing Notice disclosure. This requirement becomes effective on August 1, 2015. 

 

Scope & Applicability

The Escrow Closing Notice applies to closed-end consumer credit transactions secured by a first lien on real property or a dwelling. The term "dwelling" uses the existing definition in Regulation Z which includes vacation, second homes and manufactured homes. 

 

Importantly, the final rule does not impact when an escrow account is required on a particular loan. Rather, the new disclosure is required when an escrow account will be cancelled. 

 

Timing for Escrow Closing Notice

The timing for the Escrow Closing Notice depends on whether or not the member has requested the escrow cancellation. 

 

If the member has requested the cancellation, the credit union must provide the Escrow Closing Notice within three business days of the request. 

 

However, if the escrow cancellation is not at the member's request - the credit union must ensure the consumer receives the Escrow Closing Notice at least 30 business days before the closure of the member's escrow account.   

 

Format  and Content Requirements

The new Escrow Closing Notice must follow specific format and content requirements. The underlying regulatory requirements can be found in 12 CFR 1026.20(e). Credit unions must design their Escrow Closing Notices to be substantially similar to Model Form H-29
 
Final Thoughts
While the ability of members to cancel their escrow accounts for higher-priced mortgage loans (HPMLs) was limited by Dodd-Frank, members retain the ability to cancel their escrow accounts for other mortgage loans. Additionally, members can cancel their escrow accounts after one year for HPMLs granted prior to June 1, 2013 (versus five years for HPMLs granted on or after June 1, 2013). 
 
Credit unions should review their escrow account policies and communicate with any servicers to ensure compliance with the Escrow Closing Notice by August 1, 2015.
Prior Regulatory e-Alerts

Below are links to prior Howard & Howard Regulatory Alerts on NCUA-related compliance issues:
And, below are links to our Regulatory Alerts on the CFPB's Integrated Mortgage Disclosure rules:
Credit Union Legal Support

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For additional details on our Quarterly Legal Support Program, please click here. 
About Howard & Howard 
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In This Issue
CFPB Requires New Escrow Closing Notice
Prior Regulatory e-Alerts
Credit Union Legal Support
About Howard & Howard



    



Attorney Spotlight
  

 concentrates his practice in the area of financial regulations. His intimate knowledge of the operational issues facing credit unions provides the perfect platform to recommend best practices to reduce compliance, strategic and reputation risks.
  
Attorney Spotlight
  

  is a Member of Howard & Howard Attorneys PLLC and concentrates his practice in credit union mergers and acquisitions, loan documentation review and strategic planning.
  


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This Advisory is intended for informational purposes only, and is not offered as legal advice.  Please call a qualified attorney for counsel related to your particular situation.