Pledged Account Law and Legal Definition
A pledged account is a mortgagor’s account pledged to a lender by a lendee who does not want to have a real estate tax or insurance escrow administered by mortgage servicing. It refers to a savings account into which enough money to cover the real estate tax and insurance premium are deposited. A lendee who creates a pledged account must make the payments for real estate taxes and insurance premiums from a separate account. Upon failure to pay the taxes or premiums, the lender is allowed to use the funds in the pledged account to make such payments.
