An HPML borrower requests to cancel the required escrow account after 6 years of timely payments. The current loan balance is 75% of the original property value, but recent market conditions suggest the current LTV is 85%. Can the escrow be cancelled?
Correct Answer
C) No, because the current LTV exceeds 80% based on current value
Under TILA Section 1026.35(b)(3), escrow accounts for HPMLs may be cancelled after 5 years if the LTV is 80% or less based on the original property value OR current market value. Since the current LTV is 85%, the escrow cannot be cancelled despite meeting other criteria.
Why This Is the Correct Answer
Under TILA Section 1026.35(b)(3), escrow accounts for HPMLs may be cancelled after 5 years if the LTV is 80% or less based on the original property value OR current market value. Since the current LTV is 85%, the escrow cannot be cancelled despite meeting other criteria.
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