August 2010

Remember back in 2008 when all the Home Ownership and Equity Protection Act requirements were released? Included in the kludge was a mandate that financial institutions needed to set up escrow accounts for higher priced first mortgages, with the intention of including subprime mortgages. (This is an account established for the purpose of holding funds on behalf of the borrower until the consummation or termination of a transaction.)

April 1, 2010, was the first milestone that required FIs to set up escrow accounts on all “higher priced,” site-built home mortgages. A loan is higher priced if it has an annual percentage rate of 1.5 percentage point or more above the average prime offer rate, or 3.5 percentage points if it's a subordinate lien mortgage. 

On Oct. 1 of this year, escrow will be required for all…