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Escrow Requirements under the Truth in Lending Act (Regulation Z)

The CFPB is issuing a final rule that amends Regulation Z (Truth in Lending) to implement certain amendments to the Truth in Lending Act made by the Dodd-Frank Act. Regulation Z currently requires creditors to establish escrow accounts for higher-priced mortgage loans secured by a first lien on a principal dwelling. The rule implements statutory changes made by the Dodd-Frank Act that lengthen the time for which a mandatory escrow account established for a higher-priced mortgage loan must be maintained. The rule also exempts certain transactions from the statute’s escrow requirement. The primary exemption applies to mortgage transactions extended by creditors that operate predominantly in rural or underserved areas, originate a limited number of first-lien covered transactions, have assets below a certain threshold, and do not maintain escrow accounts on mortgage obligations they currently service.

This page contains resources to help you understand the rule and its implications.

Contents

  1. The rule
    1. Effective date
    2. Breakdown of the document’s contents
  2. Compliance guide and related information
  3. Related proposals
  4. What this means for consumers

The rule

Final rules submitted to the Federal Register

September 13, 2013: We issued a final rule amending certain provisions of the rule. It is based on a proposed rule issued in June 2013.
July 10, 2013: We issued a final rule amending certain provisions of the rule.
May 16, 2013: We issued a final rule clarifying and making technical corrections to the rule. On May 23, 2013, the Office of the Federal Register published the final rule.
January 10, 2013: We issued the document containing this final rule. On January 22, 2013, the Office of the Federal Register published the final rule.

Effective date

This rule is effective June 1, 2013.

Breakdown of the document’s contents

This document contains the following parts:

  • Preamble summarizing why we are issuing the rule, our legal authority, reasoning behind the rule, responses to comments, and analysis of the benefits, costs, and impacts of the rule
  • Regulatory text, which, when effective, will amend Regulation Z and can be found on page 98 in the issued document
  • Official interpretations of the rules which can be found on page 103 in the issued document

Compliance guide and related information

Read the Small Entity Compliance Guide to learn more about the rule in a plain language and FAQ format which makes the content more accessible for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff.


Related proposals

June 21, 2013: We issued a proposed rule with request for public comment that proposed certain amendments for several of the final mortgage rules we issued in January 2013. This proposal was published in the Federal Register on July 2, 2013. You can also review comments submitted on the electronic docket.

March 2, 2011: The Office of the Federal Register published the following proposal issued by the Federal Reserve Board: Truth in Lending You can also review comments submitted to the Board’s docket.

April 12, 2013: We issued a proposed rule with request for public comment containing clarifying and technical amendments to the final rule.


What this means for consumers

The new rule will go into effect on June 1, 2013. This summary outlines some of the ways we expect it to impact consumers who have residential mortgage loans. Download the consumer summary.


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