A lender originates a first-lien mortgage with an APR of 2.8% above the APOR. The borrower has a credit score of 720 and provides full income documentation. Which HPML requirement applies even though the borrower appears well-qualified?
Correct Answer
A) Escrow account establishment for taxes and insurance
Under TILA Section 1026.35(b), all HPMLs secured by a first lien must establish escrow accounts for property taxes and insurance, regardless of the borrower's creditworthiness or loan-to-value ratio. This requirement applies for a minimum of five years.
Why This Is the Correct Answer
Under TILA Section 1026.35(b), all HPMLs secured by a first lien must establish escrow accounts for property taxes and insurance, regardless of the borrower's creditworthiness or loan-to-value ratio. This requirement applies for a minimum of five years.
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