Finance
A Michigan lender requires a borrower to establish an escrow (impound) account for taxes and insurance. The primary benefit to the lender is:
AEarning interest on the escrowed funds
BEnsuring taxes and insurance are paid, protecting the lender's collateral✓ Correct
CAllowing the lender to reduce the interest rate
DEnabling the lender to sell the loan on the secondary market
Explanation
Lenders require escrow accounts for taxes and insurance to ensure the property remains properly insured and that tax liens do not take priority over the mortgage, protecting the lender's collateral interest.
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