What is the purpose of the California Impound Disclosure/Waiver?

The California Impound Disclosure/Waiver serves to confirm whether a borrower requires an impound or escrow account in relation to their mortgage. This document outlines the responsibilities of both the lender and the borrower regarding the handling of property taxes and insurance payments, which are often collected through the impound or escrow account.

Having an impound account helps ensure that these crucial expenses are paid on time, avoiding potential penalties or lapses in insurance coverage. If a borrower chooses to waive this requirement, they must understand the implications—such as the risk of not being able to pay property taxes or insurance when due. This process emphasizes the importance of clear communication about the financial obligations tied to homeownership, ultimately ensuring that borrowers are making informed choices about their mortgage agreements.

The other options do not directly pertain to the specific purpose of the Impound Disclosure/Waiver. For instance, the document does not address interest rates, loan repayment structures, or property record locations, focusing instead on the management of funds related to taxes and insurance.