LOAN SERVICING AGENT: Who keeps track of my payments, maintains my impound account to pay my insurance and taxes when due? Why do lenders usually require impound accounts?

We set up your loan servicing with a third party “Loan Servicing Agent”, also referred to as an “Account Servicing Agent”,  which is a typically a division of a Title Company. Regardless of the Title Company your loan is closed at, we use Grand Canyon Title Agency Account Servicing to service THE BRAD LOAN. You are assigned an account #, and are sent a payment coupon book. You mail your payments directly to the Loan Servicing Agent, they process your payment, retain the amount to be held in your impound account to pay the real estate taxes and insurance when due, and forward the interest (and principal if applicable) payment on to the lender. They see to it that the extra money you send in each month for taxes and insurance (the impound account) is paid out timely to insure both you, and the lender, your insurance and taxes are paid when due and kept current. Unpaid taxes and insurance creates additional exposure and risk for the lender, so lenders usually require the set up of an impound account to be sure insurance is keep current, helping protect their collateral against uninsured fire or other such hazards as well as insuring funds are set aside to pay real estate taxes to prevent an occurrence of unpaid taxes which become a lien on the collateralized property. The Loan Servicing Agent keeps track of your payments and how much you owe. They also send you a year end statement reporting to you how much you have paid in interest, taxes and insurance to use for your income tax deductions. In the event you want to pay off your loan due to sale or refinance, or any other reason, you, or the Title Company you are working with for your sale or refinance transaction, would contact the Loan Servicing Agent for the “payoff” statement, and the payoff of the loan would be made to the Loan Servicing Agent who would in turn release the lien from your property and forward the payoff funds to the Lender. What if I sell or payoff my loan and there is unspent money in my impound account? Under ordinary circumstances, any unspent funds in your impound account not previously used to pay your insurance and taxes will be refunded to you by the Loan Servicing Agent. This is your money. (In events of foreclosure, Deed in Lieu of Foreclosure, or other default, there may be circumstances where impound balances may be applied toward money owed to the lender).