Finance
What is the primary purpose of 'escrow' in a California-style (impound) mortgage used by Oregon lenders?
ATo hold the deed until the loan is fully paid
BTo collect monthly tax and insurance funds from borrowers and pay these expenses when due, protecting the lender's collateral interest✓ Correct
CTo prevent the borrower from refinancing too quickly
DTo hold the appraisal in trust during the loan process
Explanation
Mortgage escrow (impound) accounts collect 1/12 of annual property taxes and homeowner's insurance premiums with each monthly payment. The servicer holds these funds and pays property taxes and insurance when due.
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