If the borrower is paying the current years taxes at closing on a purchase loan and next years taxes fall outside the 12 month calendar for escrow, can we exclude it from escrow even if it is a HPML?

You could, but if you do not voluntarily escrow for the property taxes, they are going to be in for one heck of an escrow payment shock.

Awesome, thank you!

Yeah, we have dealt with Voluntarily Escrow items like this before, usually the borrowers opt for it once they see what the projected payment after the first year.

I would also say that if a borrower didn't want to make voluntary payments or could demonstrate the ability to handle that escrow issue, I might do a short year statement one or two payments in and start collecting the taxes.