I am comparing the GFE to the HUD-1 to test it for reasonableness and accuracy as per a checklist I am following. I noticed that the customer paid more charges as reflected on the HUD-1 than what was actually disclosed to the customer on the GFE. The difference is that the GFE didn't include the escrow reserves, therefore his closing costs was more than anticipated (customer decided later to escrow). Should the taxes and hazard insurance be included in the reserve section regardless if we will escrow or not. Is this considered a violation because the total charges we disclosed in the GFE were understated by thousands of dollars.

please advise
thanking you in advance

If there is a pattern or practice, this may fall under unfair or deceptive practices. A one time error will not rise to a level of a regulatory violation. That does not mean the borrower might not try something from a civil standpoint.

Randy's right. Another other thing to consider: is it possible your bank didn't plan to escrow on this loan at the time the GFE was prepared?

Never just compare the bottom line of the GFE and HUD-1/1A. Find out why there are differences. A survey is not typically needed in most closings, so it is not shown on a GFE. Yet when you discover a need for a survey, the HUD-1/1A will be off - a lot. Does that make the GFE not the best estimate at the time it was prepared? Probably not.

Thanks...we give the customer the option if they want to escrow or not. So if the customer decided to escrow later, then the GFE is okay, right?
One more question....do we always need to include the hazard insurance and taxes under the items paid in advance (900 items)when we require the insurance and taxes be paid prior to closing.

thanks