Is the statement "An escrow account is a special account managed by the borrower" true or false?

Is the statement "An escrow account is a special account managed by the borrower" true or false?

• A. True
• B. False
• C. Depends on the lender
• D. True, but only for taxes

Answer: (B)

The statement "An escrow account is a special account managed by the borrower" is false because an escrow account is typically managed by the lender or a third party, not directly by the borrower. This type of account is used to hold funds for specific purposes, such as property taxes and homeowners insurance, and ensure that these bills are paid on time. In this arrangement, the borrower makes monthly payments into the escrow account, which the lender then uses to disburse the necessary payments. This system helps ensure financial obligations related to homeownership are met, thus protecting both the borrower and the lender. The key aspect to understand is the managerial role of the lender or a third party in overseeing the escrow account, distinguishing it from other types of accounts that a borrower may directly manage.

The statement "An escrow account is a special account managed by the borrower" is false because an escrow account is typically managed by the lender or a third party, not directly by the borrower. This type of account is used to hold funds for specific purposes, such as property taxes and homeowners insurance, and ensure that these bills are paid on time.

In this arrangement, the borrower makes monthly payments into the escrow account, which the lender then uses to disburse the necessary payments. This system helps ensure financial obligations related to homeownership are met, thus protecting both the borrower and the lender. The key aspect to understand is the managerial role of the lender or a third party in overseeing the escrow account, distinguishing it from other types of accounts that a borrower may directly manage.