Q: If the bank is escrowing for flood insurance is there a regulatory requirement to also escrow for real estate taxes or can the bank waive it?
A: The federal regulations only require you to escrow for taxes and hazard insurance if the loan is an HPML. Escrowing for taxes and hazard insurance can also be required by internal or investor guidelines.
Reference:
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(b)(1):https://www.consumerfinance.gov/rules-policy/regulations/1026/35/#b-1
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