If the customer is having reserves for tax and insurance is their initial deposit to be included on the final TIL as a finance charge or does it even need to be on the TIL? Thanks!

T&I are not prepaid finance charges. They need to be on the HUD-1, but are not to be included in the TiL calculations.

Thank you so much for your advice - I really appreciate it. DAD

The cite should be
226.4(c) Charges excluded from the finance charge. The following charges are not finance charges

(7) Real-estate related fees. The following fees in a transaction secured by real property or in a residential mortgage transaction, if the fees are bona fide and reasonable in amount: . . .

. . . (v) Amounts required to be paid into escrow or trustee accounts if the amounts would not otherwise be included in the finance charge.

Taxes and hazard insurance are not finance charges, as they would be generally required whether or not the transaction was cash or financed.

Would the fee still need to be on the TIL just not as a F/C?

We collect 2 months PMI reserves at closing. Our investors want us to disclose the first month of PMI line 902, and the second month on line 1002. But the total (the two months) is still a prepaid finance charge, regardless of the fact the second months premium is put into a 1 month escrow, right?

If you are collecting 2 months reserves for the escrow account, both months must be shown on line 1002. That is the line to show reserves collected for PMI.