The FED Finished Rule
February 23, 2011 by Jack Collie · Leave a Comment
The Federal Reserve finished a rule that will increase the threshold requirements for when a first-lien jumbo mortgage is needed to set up an escrow account to maintain property tax and insurance.
The provision is a reform outlined in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Fed stated that escrow accounts will be asked when borrowers take out first-lien jumbo loans that have an APR that is 2.5% points or more above the average prime offer rate. The prior threshold was 1.5% points.
The central banks also suggested a rule that would increase the period in which loan holders are needed to remain escrow accounts on the first-lien jumbo mortgages. It would increase the needed escrow period from 1 to 5 years and continue it for a longer period of time when loan is default.
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