A CRMLA servicer collects $412,000 of borrower impounds in a month and holds it in the account it pays staff from. May borrower impounds be commingled with the servicer’s payroll funds?
Correct Answer
A) Prohibited: impounds are trust funds and are kept apart from operating money
Money collected for taxes and insurance is held for the borrower and kept in a segregated trust account, not in the account the business runs on. Other choices: reconciliation is a control on a trust account rather than a substitute for having one; the funds never belong to the servicer; and the breach is the commingling rather than a shortfall that follows from it. Source: Cal. Fin. Code § 50202
Why This Is the Correct Answer
Money collected for taxes and insurance is held for the borrower and kept in a segregated trust account, not in the account the business runs on. Other choices: reconciliation is a control on a trust account rather than a substitute for having one; the funds never belong to the servicer; and the breach is the commingling rather than a shortfall that follows from it. Source: Cal. Fin. Code § 50202
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