Trust Funds
What is 'impound' or 'reserve' accounts in real estate lending?
ATrust accounts held by a broker for client deposits
BAccounts maintained by a lender (or servicer) where the borrower's monthly payments for property taxes and insurance are collected and held until due✓ Correct
CAccounts for holding condemned property proceeds
DSecurity deposit accounts for commercial tenants
Explanation
An impound account (also called an escrow account in lending) is maintained by the mortgage servicer. A portion of each monthly payment goes into the impound account for property taxes and homeowner's insurance. The servicer pays these bills directly when due, ensuring the property remains protected.
Related California Trust Funds Questions
- A buyer and seller have a dispute over who is entitled to an earnest money deposit after a transaction falls through. The broker should:
- A broker who maintains a property management business must:
- What constitutes 'misappropriation' of trust funds?
- A broker's trust account cannot be an interest-bearing account unless:
- What are 'trust funds' in California real estate practice?
- A salesperson receives an earnest money check from a buyer. What must the salesperson do with the check?
- A broker's trust account shortage (the bank balance is less than the sum of all beneficiary ledger balances) most likely indicates:
- A broker places a client's $50,000 earnest money deposit into a money market account earning interest. The broker does NOT inform the client or credit the interest to the client. This is:
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