OpenChainGraph Suite · ART-235 · US Mortgage Compliance

HPML Escrow Requirement Test

Tests the HPML higher-priced mortgage loan definition per Reg Z §1026.35(a) and the resulting escrow obligation per §1026.35(b). A loan is HPML if its APR exceeds the APOR by 1.5 percentage points (first-lien standard), 2.5pp (first-lien jumbo above the FHFA conforming limit), or 3.5pp (subordinate lien). These Dodd-Frank structural thresholds have been unchanged since 2014. A first-lien HPML must carry a property-tax-and-insurance escrow for at least 5 years unless an exemption in §1026.35(b)(2) reaches it. Every one of those exemptions is modelled here, including the fourth condition of the small-creditor test that a creditor maintaining other escrow accounts fails. Separate from HOEPA high-cost triggers (art-234).

Reg Z §1026.35(a)+(b) eCFR point-in-time 2026-08-19 HPML Definition Escrow Requirement Four-Condition Small Creditor Test Insured Depository Path Master Policy: Insurance Premiums Only
🔒 All inputs are processed locally in your browser. No data is transmitted. Do not enter real personal data — use synthetic or anonymised inputs only.
Rate and Loan Inputs
Loan annual percentage rate.
Average Prime Offer Rate from FFIEC weekly table for a comparable transaction.
Raises HPML threshold to APOR+2.5pp for first-lien transactions per §1026.35(a)(1)(i)(B).
Sets the look-back. An application received before April 1 of the consummation year lets legs (A), (B) and (C) qualify on either of the two preceding calendar years.
Escrow Exemptions (§1026.35(b)(2)), First Lien Only
§1026.35(b)(2)(i)(A) to (E) · categorical carve-outs
Unconditional. Any one of these takes the transaction outside the escrow requirement entirely, before any creditor-size arithmetic is reached.
§1026.35(b)(2)(iii) · small-creditor exemption · ALL FOUR conditions
Comment 35(b)(2)(iii)-1 states the test as four conditions, satisfied together at consummation. A leg the inputs cannot answer denies the exemption.
(A) Rural or underserved area
The rural and underserved determination at §1026.35(b)(2)(iv) turns on census-block and county datasets that are not inputs here, so this leg is a caller attestation, not a computed result.
(B) First-lien covered transactions sold, assigned or otherwise transferred
No more than 2,000, counted for the creditor and its affiliates together (§1026.32(b)(5)). Counts only transactions that left the balance sheet, or were subject at consummation to a commitment to be acquired. Portfolio-retained loans do not count, and the population is first-lien covered transactions, not HPMLs originated.
(C) Total assets of creditor and affiliates (USD)
Strictly less than the limit, which adjusts annually with CPI-W. For calendar year 2026 the limit is $2,785,000,000 (comment 35(b)(2)(iii)-1.iii.E). A year with no published figure and no caller-supplied limit is indeterminate, never a stale default.
(D) No other escrow accounts maintained
This leg is a restriction. Once the creditor or its affiliate escrows for any serviced loan outside the two carve-outs, the exemption is lost.
§1026.35(b)(2)(vi) · insured depository or credit union path
An alternative route. Its asset test counts the institution alone; its transaction count covers creditor and affiliates and does include portfolio-retained loans (comment 35(b)(2)(vi)(B)-1). It also requires legs (A) and (D) above.
§1026.35(b)(2)(v) · commitment-to-acquire override
Requires an escrow account notwithstanding either exemption path where the acquiring person does not itself satisfy one (comment 35(b)(2)(v)-1, forward commitments).
§1026.35(b)(2)(ii) · master policy · LIMITED exemption
Insurance premiums only. Comment 35(b)(2)(ii)-1: the creditor is still required to escrow for property taxes on these dwellings regardless of whether it escrows for insurance. Comment 35(b)(2)(ii)-2 extends it beyond condominiums to planned unit developments and any other ownership arrangement with a governing association obliged to maintain a master policy.
Exemption Tests
Detail
Execution Hash (SHA-256)