An escrow mortgage is a type of account that is set up by a lender to hold a portion of a borrowers monthly mortgage payment to pay for expenses such as property taxes and insurance premiums on behalf of the borrower. The lender is responsible for managing the account and making payments on time to third parties, such as county taxing authorities and insurance companies. The funds in the account are typically calculated by the lender based on the borrowers annual tax and insurance payments, divided by 12, and added to the monthly mortgage statement. The lender may also require an "escrow cushion" to cover unanticipated costs, such as a tax increase. Escrow mortgages can help ensure that payments are made on time and reduce the risk of late payments or liens against the property.