Escrow and property tax terms, defined

Definitions

Impound account

An account maintained by a mortgage servicer that collects money monthly from a borrower and uses it to pay that borrower’s property taxes and homeowners insurance when they come due. Also called an escrow account or reserve account. More →

Escrow account

The same arrangement as an impound account. The term is more common outside the West Coast, where “impound” is generally used instead. More →

Escrow reserves

Cash collected from a borrower at closing to seed a newly created impound account, so funds are available before the first tax or insurance bill arrives. Reserves are the borrower’s own money, not a lender fee. More →

Prepaid items

The portion of property taxes or insurance premium attributable to the period before a borrower’s first mortgage payment. Prepaids are collected at closing and are distinct from escrow reserves, though both appear as cash due at closing. More →

Escrow waiver

A lender’s agreement not to collect and disburse a borrower’s property taxes and homeowners insurance, leaving the borrower to pay those bills directly. No escrow reserves are collected at closing when a waiver is granted. More →

Escrow analysis

A periodic review, typically annual, in which a servicer compares what an escrow account collected against what it paid out and adjusts the borrower’s monthly collection accordingly. More →

Escrow shortage

A deficit found during an escrow analysis when the account collected less than the actual tax and insurance bills required. It is usually resolved with a lump-sum request, a higher monthly payment, or both. More →

Escrow cushion

An additional buffer a servicer may hold in an escrow account beyond the projected disbursements, intended to keep the account from running dry if a bill comes in higher than estimated. More →

Supplemental tax bill

A one-time California property tax bill issued after a change of ownership or new construction, covering the difference between the previous assessed value and the new assessed value, prorated for the remainder of the tax year. More →

Supplemental assessment

The California reassessment that produces a supplemental tax bill. It is triggered by a change of ownership or new construction rather than by refinancing. More →

Change in ownership

A transfer of a real property interest that, in California, generally triggers reassessment of the property at its current market value and can produce a supplemental tax bill. More →

Force-placed insurance

Coverage a lender purchases on a property when the borrower’s own homeowners policy has lapsed, charged back to the borrower. It is typically more expensive than a policy the borrower would choose and often provides narrower protection. More →

Property tax lien

A claim against a property arising from unpaid property taxes. Such liens can take priority over a mortgage, which is a principal reason lenders require impound accounts. More →

Loan Estimate

The standardized disclosure a mortgage lender provides early in the application process, itemizing estimated closing costs including escrow reserves and prepaid items. More →

Reserve Eliminator

Easy Impound’s core product. It performs the collection, monitoring and payment of property taxes and homeowners insurance without requiring lender-held reserves at closing. Available nationwide for residential, commercial and private money properties. More →

Supplemental Tax Solution

An Easy Impound product for California buyers who are required to impound through their mortgage servicer. It budgets for and pays the supplemental tax bill only, for a one-time $350 technology fee with no recurring cost. More →