I asked this question of our regulators recently (OCC-we are a national charter bank). I understood that this response came from Washington (but I would always verify with your primary regulator). This was their response:
On a purchase money transaction, the seller pays real estate taxes (in actuality, a debit to the seller and an offsetting credit to the buyer). Subsequently, the buyer is liable for paying the real estate taxes when due and payable at some future date after settlement. *If the bank establishes a real estate escrow reserve, the reserves required at settlement would need to be shown on the GFE and HUD-1 Settlement Statement.
The real estate taxes for the arrearage and to bring the taxes current up to the settlement date would be reflected on the HUD-1 Settlement Statement under both the buyer/borrower and seller summary of transactions on Section J line 211 and Section K line 511 and WOULD NOT be shown on section L. If there is a real estate tax amount due at settlement, this amount would be reflected in section J and K under adjustments for items paid by seller in advance 107 and 407 county taxes and WOULD NOT be shown on section L. The total of items in Section L is carried forward to section J and K on line items 103 and 502.
For purchase money transactions with no escrow, the real estate taxes WOULD NOT be shown on the GFE. Only charges in section L of the HUD settlement statement need to be disclosed on the GFE. *Therefore only reserves (escrow) for city and county property taxes under line items 1003 and 1004 would be shown on the GFE, not the tax amounts shown in Section J.
For refinance and subordinate lien loans, annual property taxes are not required to be disclosed as POC. The line items 808 through 811 are not used to reflect property taxes but rather fees for monitoring the taxes and other services related to property taxes.
Our field office told us that property taxes do not need to be listed in Section L of the Settlement Statement or on the Good Faith Estimate. The reason for this is that lines 808-811 (where most people say to put taxes as P.O.C) are not used to reflect actual property taxes, but rather fees for monitoring the taxes and other services related to property taxes.
Also, you will see no mention of actual property taxes anywhere in the instructions. The instructions state, "Lines 808 - 811 are used to list additional items payable in connection with the loan including a CLO Access fee, a mortgage broker fee, fees for real estate property taxes or other real property charges." As you can see, the instructions do not explicity say to list actual property taxes paid. I called HUD to ask them this question and they said that actual property taxes did not need to be listed as P.O.C.
While the OCC (at least my field office) and I don't believe they should be listed on the HUD, other regulatory agencies disagree. My best advice would be to call your field office and pose the question to them. In the end, their opinion is the only one that matters.