[mint94804]

...mortgage company, but they do not pay interest on the account. Is it legal?

[Foff]

Depends. You will have to look through your documents to see which option was disclosed. It could certainly go either way.

[rowlfe]

YES, it IS legal. The escrow account is simply a convenient collection point for your property taxes and insurance. You elected to have your mortgage company collect monthly payments from you to pay out to your taxes and insurance. It is simply a convenience for YOU and not required. There is no requirement that they pay you interest on the account. My mortgage company does pay interest, but it a fractional percentage, less than 1%. It earns less than $5 per year so they do not have to declare to IRS that they paid me any interest. My average daily balance is only about $300 (as of my last annual statement) and at less than 1%, it makes something less than $3 per year.