Finance
In South Dakota, 'escrow impounds' collected as part of monthly mortgage payments are used by lenders to:
APay the lender's operating expenses
BPay the borrower's property taxes and homeowner's insurance when due✓ Correct
CAccumulate as additional collateral for the lender
DReduce the outstanding principal balance
Explanation
Escrow impounds (also called escrow accounts or reserve accounts) are funds collected monthly by the lender along with the mortgage payment and held to pay the borrower's property taxes and homeowner's insurance when they come due. This protects the lender's collateral.
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