According to the CFPB ruling, how long must a lender maintain an escrow account for property taxes and insurance?

The correct answer is based on the Consumer Financial Protection Bureau (CFPB) regulations, which mandate that lenders must establish and maintain an escrow account for property taxes and insurance for at least five years after the loan closes. This requirement is in place to ensure that borrowers have their property taxes and insurance premiums managed adequately, safeguarding both the lender's investment and the homeowner's property rights.

Maintaining an escrow account for this duration helps prevent situations where homeowners might otherwise forget to pay these critical expenses, which could lead to property tax liens or lapses in insurance coverage. Lenders are required to provide annual statements to borrowers concerning the balance and transactions within the escrow account, promoting transparency and accountability.

Understanding this requirement underscores the importance of the escrow account in managing a borrower's financial responsibilities associated with homeownership, especially in the initial years of a mortgage.