Yes. From what you have told us, it sounds like the initial escrow account statements are not being prepared correctly. Even if a property tax installment is paid before the first loan payment, the initial escrow account statement should include every disbursement made in the 12 months following the first loan payment. So, if the first loan payment is on October 1, the initial escrow account statement should show two property tax installments: the first installment, in June, and the second installment, in September.

The Real Estate Settlement Procedure Act (RESPA) escrow rules require the initial escrow statement to show disbursements made in the twelve month period following the first loan payment — the initial escrow account statement must “itemize the estimated taxes, insurance premiums, and other charges that the servicer reasonably anticipates to be paid from the escrow account during the escrow account computation year . . . .” 12 CFR 1024.17(g)(1)(i). The rules define “escrow account computation year” as “a 12-month period . . . beginning with the borrower’s initial payment date.” 12 CFR 1024.17(b). Because you can reasonably anticipate that two property tax installments will become due in the 12-month period after the borrower’s first payment, the initial escrow statement should show two property tax installments.

If the initial escrow account analysis does not include both property tax installments, the first year’s monthly escrow payments would not be high enough to cover the two disbursements for property taxes. If you raise the borrower’s monthly escrow payments to cover both disbursements without showing both disbursements, then you may be viewed as violating the RESPA’s limitation on escrow account payments to 1/12 of the total expected disbursements for the year, plus a cushions no greater than 1/6 of the total expected disbursements for the year, as reflected in the escrow account analysis. 12 CFR 1024.17(c)(1)(i).

Also, we agree that if a title company pays a property tax installment before the loan’s first payment date, that transaction should not be shown on the initial escrow account statement. The initial escrow account statement should include only taxes and other charges that are paid “from the escrow account.” 12 CFR 1024.17(g)(1)(i). Any transactions that occurred before the escrow account was created should not be included.