on the HUD 1A we are show a negative number on line 1604 last line (equals disbursement) which is our escrow depsoit we require from the customer is this okay?

No - cash required to be given by the borrower at settlement would go in line 1601 and 1604 would then be zero. You can't have a negative disbursement.

so if we are not financing the escrow deposit would it then be POC because we are not giving any money to the customer and our hud is coming out negative amount which is the amount we need to collect from customer for escrow deposit

No. You would be collecting the required deposit from the borrower at closing so it would not be a POC therefore you have to disclose it on the HUD as Randy stated.

From what I am reading, it sounds like it is okay to finance the initial escrow payment. Is this correct? If so, how is this shown on the HUD?

Line 1001 in the borrower's column.

If the initial escrow deposit is not financed how do we disclose on the HUD-1 statement? Would we list it outside the borrower's column, would we have to include the amount in the 200 series or something else entirely?

It would only be shown outside the column if it was a POC item.

When you set it up in your software (or at least we do) you have to tag it:

1. Add to loan amount,
2. Deduct from from loan amount, or
3. Paid in cash

Thanks Dan. It's starting to come together for me now.