We do construction financing that automatically converts to a permanent loan at the end of the construction period. There is only one closing. The final TIL is provided to the customer at closing. If private mortgage insurance is required, it becomes effective at the end of the construction phase. We collect two months premium up front at closing, and we remit to the insurance company at the end of the construction period. Where should the 2 months of pmi premiums be listed on the HUD-1 (line 902 or in the 1000 series)?

902 based on the assumption you are using monthly premium PMI.

The borrower(s) do pay monthly premiums, but they do not begin paying them until the construction period has ended (usually 9 months). Would the two months premium paid at closing still go on 902, even though the bank does not remit it to the insurance company for 9 months?

I'm still not sure where this should go on the HUD-1. RESPA instructions for completing the HUD-1 say "Line 902 is used for mortgage insurance premiums due and payable at settlement, except reserves collected by the Lender and recorded in the 1000 series." I'm still confused as to whether this scenario meets the description of a 902 item.

I would report these on 902. I only use the 1000 series for reserves collected for escrow payments.