What is an impound account used for by a mortgage lender?

An impound account, also known as an escrow account, is used by a mortgage lender to collect funds for taxes and insurance costs for the property. This is so that the lender can make sure these important expenses are paid on time. Option A is incorrect because an impound account is not used for storing extra interest payments. Option B is incorrect as well because it is not used for holding money for future repairs. Lastly, option D is incorrect because an impound account is not used to collect late payment fees.