Which provision typically requires monthly payments for taxes and insurance to be held in an escrow account?

• A. PITI
• B. Escrow
• C. Due on sale clause
• D. Acceleration clause

Answer: (B)

An escrow arrangement is used to make sure taxes and insurance are paid on time. In this setup, the lender requires monthly deposits to an escrow account—often as part of the overall monthly mortgage payment—so that when tax bills and insurance premiums come due, the lender can pay them from that account. This protects the lender from tax liens or lapsed insurance and helps the borrower avoid missed payments. The total monthly payment is commonly referred to as PITI (principal, interest, taxes, and insurance), which describes what goes into the payment, but the specific provision described here is the escrow arrangement that holds the taxes and insurance funds. The other options relate to loan terms or remedies (such as what happens if the loan is not paid or if the property is sold) and do not describe holding taxes and insurance in an escrow account.