Should escrows be required by law?

Some say current practice contributes to subprime defaults

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With one important exception, lenders price loans on the assumption that borrowers will include taxes and insurance premiums in their monthly mortgage payments. These payments are placed in an escrow account under the lender's control. On a payment date, the amount due is paid by the lender. The escrow requirement protects the lender. If the taxes are not paid, the tax authority could place a lien on the property that would have a higher priority than the lender's lien. Similarly, if the insurance premiums are not paid and the house burns down or is flooded away, the lender's protection goes with it. Escrow is not an absolute requirement. Borrowers who want to pay their own taxes and insurance can waive the requirement by paying a modest fee. Most borrowers offered the choice accept the escrow, I suspect less to save the fee than because they find that the payment discipline is useful. I escrowed on both my mortgages because it simplified my life. In the subprime market, h...