How does Escrow work when you are a note holder

[Evan Rattray]

Good Evening all.  I'm getting into note investing and have been doing a lot of studying and reading trying to prepare myself as best I can.  I was on Paperstac looking at notes and see several of them have "Escrow/Impound" in the Note Terms.  How does escrow affect us as note holders?  Is that something I need to calculate for and keep money back for?

[Bryan Hartlen]

@Evan Rattray this means that the current servicer is collecting note payments as well as taxes and insurance and is holding the tax and insurance portion of the payor’s funds and is responsible for paying taxes and insurance on the payor’s behalf.

If you buy a note with an escrow account, the escrowed funds and the obligation to pay taxes and insurance transfer to you and your servicer.