At closing, a lender calculates that a borrower's annual property taxes are $3,600 and annual homeowner's insurance is $1,200, both to be escrowed. What is the maximum initial escrow deposit the lender may collect from the borrower at closing under RESPA Section 10?

Correct answer: $800

Under RESPA Section 10, the maximum cushion is two months' worth of escrowed charges. Total annual escrowed amount = $3,600 + $1,200 = $4,800. Monthly escrow = $4,800 ÷ 12 = $400/month. Maximum cushion = 2 × $400 = $800. The lender may also collect prorated amounts needed to ensure funds are available before the first disbursement, but the cushion itself is capped at $800. "$400" ($400) represents only one month's cushion. "$1,600" ($1,600) represents four months. "$2,400" ($2,400) equals six months, which significantly exceeds the RESPA limit.