Escrow Account Definition
Definition
An escrow—or impound—account is where funds are held to pay property tax and insurance bills on your behalf. If your loan is escrowed, a part of your mortgage payment goes into your escrow account every month.
Then we use the money to make your property tax and insurance payments for you. You never need to worry about whether you’re saving enough or when a payment is due—we’ll manage this for you.
Note: Your escrow balance cannot be used to pay amounts owed, such as payments, fees, or corporate advances.
When Required
Many times, escrow accounts are a required part of a loan agreement or loan modification and stated in the loan documentation.
- When required, an escrow account will be set up at the loan closing, upon application of loan modification terms to the account, or shortly after.
Note: If your loan was transferred to us, and you had an escrow account with your previous servicer, your escrow account was transferred as well.
We may also add an escrow account to your loan to pay delinquent property taxes or purchase homeowner insurance due to a lapse or deficiency in coverage.
Note: In most cases, escrow cannot be removed at a later date if added because of delinquent property taxes or lapsed insurance coverage.
Options
If you don’t have an escrow account, you can request that we add an escrow account for you.
Conversely, if you have an escrow account and want to remove it, you can submit a request to remove escrow.
Note: These requests are subject to eligibility requirements.
Feel free to contact us any time with questions about your escrow account.
