First time posting! We're in the process of closing on a house for our employee of many years. We are acting as the bank, setting up an installment note tied to deed, etc. What is unusual with this one is that we'd like to set up an impound account to collect property taxes and home insurance payments from borrower monthly. Is this doable as a private lender? It looks like there are rules banks must follow like: don't collect too much, pay interest on impound funds. Not sure where to find this information or if I'm missing any crucial rules/regulations . . . We're in California.
Thanks in advance for any guidance.
Hey @Christine Kielpinski it might be better to get a servicing company to handle all of that. They will take the payment, collect escrow for taxes, insurance. THEY will adjust the payment annually for increases in payments this way you dont have to bother with complying with all the laws. It is usually about $25 per payment. You can have the buyer pay it or split it. They send you the balance every month. The servicing company will also take care of annual statements for the homeowners. It is worth the peace of mind.
Thanks so much @Rick Pozos . That's a bargain for the peace of mind! I will ask our escrow/title company to hook us up. Wishing you the best.