A formula used by lenders to ensure that the proper amount of money is collected in a borrower's escrow account at closing to cover upcoming costs for taxes and insurance. State law governs the maximum amount that may be retained in escrow (typically 2 prorated months of property taxes and insurance premiums based on a 12 month calculation period). The aggregate adjustment may result in a credit to the borrower so that funds in excess of the allowable amount aren't tied up in escrow.