Fiserv Inc.'s Loan Servicing Platform is now designed to assist customers in complying with the new Truth in Lending Regulation Z rules that require an escrow account for taxes and insurance on home equity loans. The change becomes effective April 1, 2010.
Fiserv says its platform is the first servicing system that already has the capability to manage escrow accounts for any type of loan, including home equity loans.
‘This regulatory change will present challenges for many financial institutions, so it is crucial that lenders are aware that the functionality that used to be exclusive to the traditional mortgage market – such as escrow – is now required on the consumer loan side," says Cathy Martin, vice president, Consumer Loan Products, Loan Servicing Solutions, Fiserv. "When Fiserv developed its single-platform servicing strategy several years ago, we took into consideration that escrowing on non-mortgage loans might be necessary at some point."Â
The changes to Regulation Z will require escrow accounts for what the U.S. Department of Housing and Urban Development defines as all ‘higher-priced’ first-lien mortgages, based on an interest rate formula. These loans have an annual percentage rate that exceeds the average prime rate for a comparable transaction on the date the interest rate is set.