An escrow account, also known as an impound account, is set up by lenders or loan servicers to manage funds for recurring property expenses included in a mortgage agreement. This account collects portions of monthly mortgage payments to cover property taxes, homeowners insurance, and possibly mortgage insurance. By ensuring funds are available for these expenses, escrow accounts prevent delinquencies and liens on the property, providing a convenient and secure way for borrowers to manage large annual or semi-annual payments without the need to budget separately for them. Requirements and regulations for escrow accounts vary by jurisdiction and loan terms, so it’s vital to consult specific loan agreements for details.