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We provide the escrow disclosure required by the Mortgage Escrow Account Act for all mortgage closings, whether purchases or refinances. Are we required to provide this for refinances, or only for purchase transactions? – IBA Compliance Connection

IBA Compliance Connection

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We provide the escrow disclosure required by the Mortgage Escrow Account Act for all mortgage closings, whether purchases or refinances. Are we required to provide this for refinances, or only for purchase transactions?

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We believe that the escrow disclosure required by the Mortgage Escrow Account Act is required only for purchase transactions.

The Act’s requirements, including the escrow disclosure requirement, apply only to mortgage lenders that are extending a loan or servicing a loan “for the purpose of enabling another to purchase a residence” (specifically, a “single-family owner occupied residential property”). Consequently, we believe that the escrow disclosure requirement in Section 11 of the Act applies only to purchase loans.

For resources related to our guidance, please see:

  • Mortgage Escrow Account Act, 765 ILCS 910/11 (“Notice of the requirements of the Act shall be furnished in writing to the borrower at the date of closing.”)
  • Mortgage Escrow Account Act, 765 ILCS 910/4 (“On or after the effective date of this Act, each mortgage lender in conjunction with the granting or servicing of a mortgage on a single-family owner occupied residential property, shall comply with the provisions of this Act.”)
  • Mortgage Escrow Account Act, 765 ILCS 910/2 (“‘Mortgage Lender’ means any bank, savings bank . . . who extends the loan of monies for the purpose of enabling another to purchase a residence or who services the loan, including successors in interest of the foregoing.”)