I think I may understand but want confirmation, please.
I have a loan closing this Friday which the loan has an escrow account established. 1st loan payment date is October 3 customer will pay insurance at closing of 1379.00 which is due in September and has county taxes due this November of $4382.76. When I did the analysis it shows initial escrow deposit of $4382.76 with an aggregate adjustment on line 1107 of -$229.83 my question is should the -$229.83 be shown on the HUD as a credit? Since this is not an area where it is a tolerance violation if the HUD is not done correctly should we still provide credit to the customer or can we refund the aggregate at the annual analysis or what needs to be done if this is not correct??

I have 1 more question if the difference between the HUD and GFE is a negative % that is okay correct?

The aggregate adjustment is shown on Line 1007 outside the column and is subtracted from the other items shown in Lines 1002 -1006 outside the column and the sum is shown in Line 1001 inside the column.

A negative difference is good.

I have a question that falls in with this one. We use Rembrandt to prepare our documents. The issue we are having is that we are financing the escrow reserves on the loans we are doing (not necessarily by choice). Rembrandt has told us that they do not support documents where the reserves are financed. The issue of how to handle the aggregate adjustment is what I would like guidance with. We do not feel these funds should be given back to the customer since they did not pay the reserves in to begin with. We have been applying this aggregate balance to the loan as a principal payment at the time we book. Is this acceptable? I can’t seem to find anything that addresses it. The Disbursement Authorization that prints out from Rembrandt is hard coded to say “check # payable to”. Our HUDs are showing ‘cash to borrower’. Is anyone else having this issue? Can anyone give direction about how we should handle this?

Hazard Ins reserve - 500
RE Tax Reserve - 400
Aggregate adjustment - (100)
Your initial Escrow deposit should be 800

Applying a credit to the principal balance is not compliant with the escrow accounting rules.

Rembrandt will do the escrow account analysis as required. It's not very user friendly: you basically have to do manual calculations and it is a royal PITA but it will provide the initial escrow analysis statement and HUD correctly. We switched to ARTA due to its easier use.

Where can I find the escrow accounting rules?

3500.17(c)(2) and (d)(2) will give you an idea. You may also want to look at the webinar I did for BOL. You can find more info here:
http://www.bankersonline.com/bankerstore/index.php?main_page=product_info&products_id=971

You can also download a free Escrow calculator from our website:
http://www.bankerscompliance.com/compliance-resources/free-downloads.htm