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Why does a mortgage lender escrow funds?

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Final answer:

A mortgage lender escrows funds to ensure that the borrower can pay for expenses such as home insurance and property taxes.

Step-by-step explanation:

A mortgage lender escrows funds to ensure that the borrower can pay for expenses such as home insurance and property taxes. When a lender escrows funds, they collect a portion of the borrower's monthly mortgage payment to cover these costs. The lender then holds these funds in a separate account and uses them to make the necessary payments on behalf of the borrower.

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