Cannot determine if pts and/or orig charges be amortized?

[AZ-Tax]

My client has $1000 of pts reported on 1098 (only) and $2057 "Originations Charges" appearing on HUD (not on any 1098). According to pub 936 http://www.irs.gov/pub/irs-pdf/p936.pdf
"#6 The funds use to pay for pts cannot have been borrowed from the lender or mortgage broker". Seems to me if the points dont appear on the HUD, the points where not included in the mortgage therefore paid in cash, correct, but then the IRS says in #9 "The points are clearly shown on the settlement statement as points charged for the mortgage" for which the $1000 pts do NOT appear anywhere on the HUD "unless" its part of the Orig Charges.

According to taxslayer.com, if points did not appear on form 1098, they are most likely amortize. http://www.taxslayer.com/support/article.php?id=075

[Burke]

My experience has been that they are always shown on the HUD-1 somewhere if they have been charged. Usually on Line 801 and 802. Sometimes they are not in the columns but inset on the same line or on another blank line below that section, especially if they were paid separately. It might show "POC." Just had one that was shown that way, with a gross amt, a credit and then a net figure. As to whether the $1,000 and the $2,057 you mention were actually points, you can tell if they are by determining if it is some percentage of the principal loan amount. If it is a flat fee not a percentage, it is not points. BTW, they are not always shown on the 1098, so you cannot go by that. The quote you refer to as "cannot have been borrowed from the lender," refers to the full deduction in year of purchase. They should be deductible in full in that case if the buyer paid in enough funds (look at bottom - cash from borrower) to cover the points). Otherwise, they are amortizable.

[Burke]

I just had a thought. Perhaps the figure of $1,000 is on the 1098 because that represented the buyer's Earnest Money (down payment), and he put no other funds up to purchase the property? Then the $2,057 would be the total points, $1,000 would be fully deductible in 2010, and the balance of $1,057 would be amortized over the loan. Make sense?