An impound/reserve benefits which party the most?

The lender benefits the most from an impound or reserve account because it provides a secure way to ensure that property taxes and insurance premiums are paid on time. By requiring the borrower to contribute to an impound account as part of their monthly mortgage payment, the lender can mitigate the risk of default due to missed payments in these critical areas.

Having these funds set aside helps protect the lender's investment in the property. If the borrower fails to pay property taxes, the property could go into tax foreclosure, jeopardizing the lender's security interest. Similarly, if homeowner's insurance premiums are not paid, the property might be left uninsured, risking the property’s value in case of damage or loss.

By having control over these payments, the lender ensures that the borrower remains compliant with these obligations, thereby reducing the potential for financial losses related to the property. This arrangement typically leads to a more stable financial environment for both the borrower and the lender, but the lender stands to gain the most security and peace of mind through the use of an impound account.