Impound Payments Clause Samples
The Impound Payments clause requires a borrower to make regular payments into an escrow or impound account, which the lender uses to pay property-related expenses such as taxes and insurance on the borrower's behalf. Typically, the lender estimates the annual costs for these expenses, divides the total by the number of payment periods, and collects this amount along with the borrower's regular loan payments. This arrangement ensures that essential property expenses are paid on time, reducing the risk of tax liens or insurance lapses that could jeopardize the lender's security interest in the property.
Impound Payments. Mortgagor will, upon receipt of written request from Mortgagee in its sole and unreviewable discretion, pay to Mortgagee contemporaneously with each monthly payment of interest, principal or principal and interest, a sum equal to one-twelfth (1/12th) of the hazard insurance premiums, real estate taxes, water rents or charges, sewer rents, payments in lieu thereof, special assessments and any other tax, assessment, lien, claim or encumbrance which may at any time be or become a lien on the Mortgaged Property prior to, or on a parity with, the lien of this Mortgage so as to enable Mortgagee to pay the same at least thirty (30) days before they become due, and Mortgagee shall, upon receipt of bills for such charges, pay the same from the sums deposited hereunder. If special assessments against the Mortgaged Property may be paid in installments and Mortgagor elects to do so, the monthly payments to Mortgagee for such special assessments shall be one-twelfth (1/12th) of the current annual installments. No amounts so paid shall be deemed to be trust funds but may be commingled with general funds of Mortgagee, and no interest shall be payable thereon. If, pursuant to any provision of this Mortgage, the whole amount of said principal debt remaining or any installment of interest, principal or principal and interest become due and payable, Mortgagee shall apply any amounts so held in payment of the premiums or payments for which the amounts were deposited. If the taxes, assessments, levies, charges or fees required to be paid pursuant to Section 3.2 hereof shall exceed the estimate therefor, Mortgagor shall without demand forthwith make good the deficiency. If the taxes, assessments, levies, charges, or fees shall be less than the estimate therefor, Mortgagee shall refund the overpayment to Mortgagor. Mortgagor will furnish to Mortgagee tax bills in sufficient time after Mortgagor's receipt thereof to enable Mortgagee to pay such taxes, assessments, levies, charges and fees before interest and penalties accrue thereon.