We are not aware of any federal regulations that apply to escrow accounts for commercial loans. RESPA excludes from coverage any loan made “primarily for a business, commercial, or agricultural purpose,” as Regulation Z defines the term (in 12 CFR 1026.3(a)(1) and the accompanying official staff commentary). 12 CFR 1024.5(b)(2). The Regulation Z commentary specifically states that loans for non-owner-occupied rental properties are deemed to be business purpose and not consumer loans. Comment 3, Official Staff Commentary, 12 CFR 1026.3(a).

There are at least three Illinois statutes that apply to escrow accounts, but only two of those could apply to an escrow account for a commercial loan, and in only certain situations:

• The Mortgage Payment Statement Act applies to any mortgage of real property, without an exclusion for mortgages securing business-purpose loans. The law allows borrowers to request, in writing, an itemized statement following an increase in escrow payments.

• Another law that could apply is the Mortgage Tax Escrow Act, as it applies to any “agreement for the mortgage of a single-family residence,” without an exclusion for mortgages securing business-purpose loans. Therefore, we believe this law could apply to a business-purpose loan secured by a single-family residence (possibly even if purchased as rental property). The law prohibits lenders from requiring a borrower to maintain more than 150% of the property taxes paid on the property in the past year; usually this requirement is preempted by the RESPA escrow account requirements, except in the case of commercial loans.

• The Mortgage Escrow Account Act, which imposes several requirements on escrow accounts, applies only to “the granting or servicing of a mortgage on a single-family owner occupied residential property” that is made “for the purpose of enabling another to purchase a residence.” 765 ILCS 910/4; 2(c). We believe these provisions would exclude most business-purpose loans from the law’s scope.