Under the TILA HPM escrow rule, lenders must establish and maintain an escrow account for borrowers who accept a first lien higher-priced mortgage loan for a minimum number of years.

Under the TILA HPM escrow rule, lenders must establish and maintain an escrow account for borrowers who accept a first lien higher-priced mortgage loan for a minimum number of years.

• A. 3 years
• B. 5 years
• C. 7 years
• D. 10 years

Answer: (B)

The important concept here is the protection provided by the TILA HPML escrow rule: for higher-priced mortgage loans that are secured by a first lien, lenders must set up and maintain an escrow account to cover property taxes and insurance for a defined period after the loan closes. That period is five years. This five-year minimum ensures that taxes and insurance are paid on time, reducing the risk of tax liens or gaps in insurance that could threaten the borrower’s loan or financial footing. The rule applies specifically to first-lien HPMLs, and the five-year duration is the standard requirement. So, among the options, five years is the correct minimum. The other durations (three, seven, ten years) do not reflect the standard set by the HPML escrow requirement.

The important concept here is the protection provided by the TILA HPML escrow rule: for higher-priced mortgage loans that are secured by a first lien, lenders must set up and maintain an escrow account to cover property taxes and insurance for a defined period after the loan closes. That period is five years.

This five-year minimum ensures that taxes and insurance are paid on time, reducing the risk of tax liens or gaps in insurance that could threaten the borrower’s loan or financial footing. The rule applies specifically to first-lien HPMLs, and the five-year duration is the standard requirement.

So, among the options, five years is the correct minimum. The other durations (three, seven, ten years) do not reflect the standard set by the HPML escrow requirement.