To help ensure that the proposal preserves access to credit for the full range of consumers, we have sought public comment on this issue. Escrows for taxes and insurance Another part of our proposal for higher-priced loans – a requirement to escrow taxes and insurance – would also help ensure that borrowers can afford their payments.
Escrowing has become standard practice in the prime market, and the case for making it standard in the subprime market, too, appears compelling. Consumers with shorter or weaker credit histories may be less likely to appreciate the sizable burden that taxes and insurance can add to the cost of homeownership, or more vulnerable to being misled by payment quotes that leave out these amounts.