Questions about holding accounts for insurance + taxes

[Omi C.]

Good day all!

I recently bought a 4-plex as my first investment property and am having some issues with the lender.

The first issue was that the lender surprised me on the HUD by collecting 3 months advance taxes+insurance dues that were meant for a holding account. I expected the advance year of insurance payments - but I had specifically requested not to have a holding account for insurance+taxes, and that I would manage these payments on my own when due. I discovered this issue in the HUD a day before closing, and since the deal was time bound I signed the docs to close the deal. I am going back and forth with the lender on this to try and close this holding account. They claim that I agreed to a holding account, but I have always maintained that I would prefer to manage my own money. Has anyone been in this situation and successfully closed a holding account?

Second issue: In my monthly payments, they're still collecting insurance payments. Despite the fact that I've already paid for the first 12 months as well as a 3 month advance for next year. This has effectively doubled my insurance costs for the first year.

Does this sound wrong to anyone else? Is this the norm for multifamily and conventional loans?

Omi