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Escrow and its Significance

Posted on: 31st Mar, 2004 01:32 am
Escrow is a procedure in which a disinterested neutral third party holds the legal documents and funds on behalf of a seller or a buyer. Also, it is an account created by the lender to pay the property taxes and insurance premiums or to cover repairs.

Escrow Account is established at the time of closing of a mortgage loan. An escrow account is set up by the lender. It is set for future payments as they become due of recurring items relating to the mortgaged property. The borrower makes periodic payments, usually monthly, for-
  • Real estate taxes.
  • Mortgage insurance premiums.
  • Hazard insurance.
  • Assessments.
  • Completion of repairs or improvements to a property that cannot be completed prior to closing.
Escrow Analysis is a periodic examination of an escrow account to make sure if current monthly deposits balances will provide sufficient funds to pay-
  1. Property taxes.
  2. Hazard insurance.
  3. Other bills when they come due.
The method and format of the analysis is prescribed by federal regulation.

Escrow Payment is the part of a borrower's monthly mortgage payment that is held by the loan servicing company to pay for-
  • Property taxes.
  • Hazard insurance.
  • Mortgage insurance.
  • Lease payments.
  • Other items as they become due.
Escrow Disbursement is a use of the escrow funds to pay-
  • Real estate taxes.
  • Hazard insurance.
  • Mortgage insurance.
  • Other property expenses, as they come due.

Related ArticleRelated Forums DiscussionRelated References:
got financed to buy a home, but lost my job two months later and my home went into foreclosure. what will happen next ?
Posted on: 11th Aug, 2006 04:04 pm
Hi,

You should discuss with your lender about other alternatives that can be possible like :

#Special Forbearance
#Pre-foreclosure sale
#Mortgage Modification
#Deed-in-lieu of foreclosure
#Partial Claim
Posted on: 11th Aug, 2006 04:21 pm
Posted on: 11th Aug, 2006 04:31 pm
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