A lender may add 1/12th of the estimated cost of the annual property taxes and hazard insurance on the mortgaged property to the monthly loan payment for deposit in:
Lenders often require borrowers to pay 1/12th of annual taxes and insurance each month into an escrow (impound or reserve) account.
The lender then pays property taxes and insurance premiums when due.
PMI accounts relate to mortgage insurance, not taxes/insurance.
Margin and adjustment accounts relate to investment or adjustable-rate loans.
Correct answer = C.
[Reference: NJ Real Estate Salesperson Study Guide, Chapter on Financing and Escrow Accounts., ]
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