The FHA and VA require that all loans insured or guaranteed by them have an escrow account and it cannot be closed. If you had a conventional loan, at the time your loan was closed, we may have offered you the option to waive establishing an escrow account if you made a down payment of 20% or more.
When a borrower does not have an escrow account, Lenders expect those borrowers to pay their taxes, insurance and other assessments when due. When these items are not paid timely, the lender's security interest in the property is put at risk, forcing the lender to pay these delinquent amounts. The lender then has the right to establish an escrow account to be repaid, and to accumulate funds for future payment of these items, among other rights.
Contact a Loan Officer for further information.