12 CFR §1026.35 — Requirements for higher-priced mortgage loans (HPML)
Regulation Z §1026.35 imposes the HPML regime: first-lien escrow, written-appraisal-with-interior-inspection requirement, additional-appraisal property-flip rule, application-stage disclosure, copy delivery, and open-end-evasion ban.
Verbatim regulatory text
Verbatim provisions from 12 CFR §1026.35 — Requirements for higher-priced mortgage loans (HPML) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
12 CFR §1026.35(b)(1) — Escrow required for first-lien HPML
(b) Escrow accounts —(1) Requirement to escrow for property taxes and insurance. Except as provided in paragraph (b)(2) of this section, a creditor may not extend a higher-priced mortgage loan secured by a first lien on a consumer 's principal dwelling unless an escrow account is established before consummation for payment of property taxes and premiums for mortgage-related insurance required by the creditor, such as insurance against loss of or damage to property, or against liability arising out of the ownership or use of the property, or insurance protecting the creditor against the consumer 's default or other credit loss.
12 CFR §1026.35(c)(3)(i) — HPML written appraisal with interior inspection required
(3) Appraisals required —(i) In general. Except as provided in paragraph (c)(2) of this section, a creditor shall not extend a higher-priced mortgage loan to a consumer without obtaining, prior to consummation, a written appraisal of the property to be mortgaged. The appraisal must be performed by a certified or licensed appraiser who conducts a physical visit of the interior of the property that will secure the transaction.
12 CFR §1026.35(c)(4)(i) — Additional appraisal required for short-window property flips
(4) Additional appraisal for certain higher-priced mortgage loans —(i) In general. Except as provided in paragraphs (c)(2) and (c)(4)(vii) of this section, a creditor shall not extend a higher-priced mortgage loan to a consumer to finance the acquisition of the consumer 's principal dwelling without obtaining, prior to consummation, two written appraisals, if:
12 CFR §1026.35(c)(5) — HPML application-stage appraisal disclosure (three-business-day rule)
(ii) Timing of disclosure. The disclosure required by paragraph (c)(5)(i) of this section shall be delivered or placed in the mail no later than the third business day after the creditor receives the consumer 's application for a higher-priced mortgage loan subject to paragraph (c) of this section. In the case of a loan that is not a higher-priced mortgage loan subject to paragraph (c) of this section at the time of application, but becomes a higher-priced mortgage loan subject to paragraph (c) of this section after application, the disclosure shall be delivered or placed in the mail not later than the third business day after the creditor determines that the loan is a higher-priced mortgage loan subject to paragraph (c) of this section.
12 CFR §1026.35(c)(6) — HPML appraisal copy delivery (3-business-days-before-consummation rule)
(6) Copy of appraisals —(i) In general. Except as provided in paragraph (c)(2) of this section, a creditor shall provide to the consumer a copy of any written appraisal performed in connection with a higher-priced mortgage loan pursuant to paragraphs (c)(3) and (c)(4) of this section.
12 CFR §1026.35(d) — Prohibition on structuring as open-end to evade HPML rules
(d) Evasion; open-end credit. In connection with credit secured by a consumer 's principal dwelling that does not meet the definition of open-end credit in § 1026.2(a)(20) , a creditor shall not structure a home-secured loan as an open-end plan to evade the requirements of this section.