23 Jul 2007 07:03 am
Should mortgage escrow be required by law?
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Normally, lenders price loans on the assumption that borrowers will include taxes and insurance premiums in their monthly mortgage payments. These payments are placed in an escrow account under the lender’s control. On a payment date, the amount due is paid by the lender. Its purpose is to force borrowers at the outset to confront their ability to afford the major expenses of home ownership, and this purpose would be served by an escrow requirement that applied only to the first year. After that, borrowers should be allowed to opt out if they want to. |