Who ultimately owns the funds in an impound account?

The funds in an impound account, often referred to as an escrow account, are technically owned by the mortgagor, or borrower. This account is set up by the lender to collect and hold funds for specific purposes, such as property taxes and homeowner’s insurance premiums. Even though the lender manages these funds and has control over their disbursement, the borrower is considered the owner of the funds because they are placed into the account to satisfy the borrower’s obligations concerning their property.

When the borrower makes mortgage payments, a portion of those payments may go towards the impound account. The lender uses the funds from this account to pay the property taxes and insurance premiums on behalf of the borrower, ensuring those obligations are met in a timely manner. Once the borrower has satisfied their loan and any remaining balance in the impound account typically belongs to them as well.

This understanding clarifies that while the lender administers the account, the actual ownership remains with the borrower.