Which statement describes the purpose of an impound account?

An impound account, also known as an escrow account, is specifically designed to hold funds for property taxes and insurance premiums. This arrangement allows borrowers to make monthly payments that include a portion allocated to the impound account. This ensures that these important expenses are covered in a timely manner and helps prevent any lapses in property tax payments or insurance coverage, which could lead to dire consequences for the homeowner, such as penalties or foreclosure in extreme cases. Using this account, lenders can also ensure that the funds are available when they are due, thereby protecting their investment in the property.

The other statements do not accurately describe the primary function of an impound account. Real estate commissions are typically paid directly from the sale proceeds and not held in an impound account, reserving funds for errant loan payments does not relate to the predefined purpose of an impound account, and while a mortgage loan may be secured by the property itself, the impound account is not aimed at securing the loan but rather managing specific ongoing costs associated with property ownership.