Settlement FAQs

what does a hud 1 settlement statement look like

by Ms. Oceane Lang Published 3 years ago Updated 2 years ago
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What is HUD-1 Settlement Statement?

Janet Wickell. Updated January 29, 2020. The HUD-1 Settlement Statement is a standard government real estate form that was once used by settlement agents, also called closing agents, to itemize all charges imposed upon a borrower and seller for a real estate transaction.

What is HUD-1 form?

The statutes of the Real Estate Settlement Procedures Act (RESPA) required that the HUD-1 form be used as the standard real estate settlement form in all transactions in the United States that involved federally related mortgage loans. 2.

When Is a HUD-1 Used in 2020?

The HUD-1 settlement statement is still used in 2020 for reverse mortgages. These types of mortgages are very popular with sellers over the age of 62 who want to pull equity out of their homes. 4 

When Is the HUD-1 Distributed?

Before October 3, 2015, RESPA stated that borrowers should be given a copy of the HUD-1 at least one day prior to settlement. 5 However, entries could easily still be coming in, right up until a few hours before closing.

What is line 902 on a mortgage?

Line 902 shows mortgage insurance premiums that are due at settlement. Escrow reserves for mortgage insurance are recorded later. It should be noted here if your mortgage insurance is a lump sum payment that's good for the life of the loan.

When did the closing disclosure change?

Borrowers began receiving a form called the Closing Disclosure instead of a HUD-1 for most kinds of mortgage loans after October 2015. The change was in response to the TILA RESPA Integrated Disclosures, or simply TRID, which overhauled the way mortgages are processed and disclosed. 3.

What is the 701 and 702 section?

This section deals with the commissions paid to real estate agencies. Lines 701 and 702 show how the commissions are split between two participating agencies. 6 

What is HUD-1 Settlement Statement?

The HUD-1 Settlement Statement is a government form that was used widely before 2015 when buying, selling, and refinancing real estate. It lists all the charges and credits to the buyer and seller in a real estate settlement or a mortgage refinance. You will also hear people refer to it as a settlement or closing statement.

What does a HUD-1 look like?

The statement is divided into two columns. The left lists all charges to the borrower and the right all those to the seller.

What is page 3 of HUD?

Page 3 relates to the figure in the Good Faith Estimate (GFE) which has been replaced by the Loan Estimate. The lender would have supplied GFE estimate figure to the settlement agent upon application of the loan. The HUD figures are listed side by side with the GFE so that a comparison can be made and discrepancies highlighted. The standard loan terms shown here will include the origination fee, interest rate, term, and payment.

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What is HUD-1 Settlement Statement?

The HUD-1 Settlement Statement is a document that lists all charges and credits to the buyer and to the seller in a real estate settlement, or all the charges in a mortgage refinance. If you applied for a mortgage on or before October 3, 2015, or if you are applying for a reverse mortgage, you receive a HUD-1.

What form do you use for a refinance loan?

In transactions that do not include a seller, such as a refinance loan, the settlement agent may use the shortened HUD-1A form.

What is a HUD-1 Settlement Statement?

We can define the HUD-1 statement, also known as the HUD-1 form, as a settlement form that itemizes and reconciles all the charges that the buyer and seller pay in purchasing real estate. These charges include a loan origination fee and discount points.

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What is HUD-1 Settlement Statement?

The HUD-1 Settlement Statement is a standardized mortgage lending form in use in the United States of America on which creditors or their closing agents itemize all charges imposed on buyers and sellers in consumer credit mortgage transactions.

What is a HUD-1?

The HUD-1 (or a similar variant called the HUD-1A) is used primarily for reverse mortgages and mortgage refinance transactions. The reference to 'HUD' in the form's name refers to the Department of Housing and Urban Development . Federal regulations require that unless its use is specifically exempted, either the HUD-1 or the HUD-1A, ...

What is the HUD-1A used for?

Federal regulations require that unless its use is specifically exempted, either the HUD-1 or the HUD-1A, as appropriate, must be used for all mortgage transactions that are subject to the Real Estate Settlement Procedures Act.

When do you need to inspect a HUD-1?

The settlement agent must permit the borrower to inspect the HUD-1 or HUD-1A settlement statement, completed to set forth those items that are known to the settlement agent at the time of inspection, during the business day immediately preceding settlement. Items related only to the seller's transaction may be omitted from the HUD-1.

Is a HUD-1 exempt from the Truth in Lending Act?

The TRID rule mandates the use of a Closing Disclosure form instead. The use of the HUD-1 or HUD-1A is also exempted for open-end lines of credit (home -equity plans) covered by the Truth in Lending Act and Regulation Z. A HUD-1 or HUD-1A Settlement Statement is prepared by a creditor or, more typically, by the settlement agent who conducts ...

HUD-1 Sections A, B, C, D, E, F, G, H and I

Sections A through I are very general. They contain basic information about the type of loan being used to pay for the property, as well as personal information (i.e. addresses, date of transaction, location of the property, etc.).

HUD-1 Section J

Section J on a HUD-1 Settlement Statement contains details and information that pertain primarily to the borrower. The borrowers costs, credits, and net amount owed for the purchase of the property are carefully outlined in section J. The following sub-sections related to the borrowers responsibilities are important parts of section J:

HUD-1 Section K

Section K on a HUD-1 Settlement Statement contains details and information that pertain to the seller. It is basically a summary of the sellers transaction. Here you will find a figure that is the gross amount due to the seller, as well as adjustments that have been made for items like past due taxes or taxes paid in advance.

HUD-1 Section L

Section L on a HUD-1 Settlement Statement contains detailed information about the financing and processing of the sale or refinancing of the home. The following sub-sections related to the settlement charges are important parts of section J:

Good Faith Estimate

One final note. Mortgage lenders or brokers are required to provide borrowers with a Good Faith Estimate as required by RESPA. The Good Faith Estimate is documented on a form that matches the HUD-1 Settlement Statement. The HUD-1 is then required to provided to the borrower at lease one day before closing.

What is a settlement statement?

A settlement statement is an itemized list of fees and credits summarizing the finances of an entire real estate transaction. It serves as a record showing how all the money has changed hands line by line.

Who is responsible for preparing the settlement statement?

Whoever is facilitating the closing — whether it be a title company, escrow firm, or real estate attorney — will be responsible for preparing the settlement statement.

Is a settlement statement the same as a closing statement?

Yes, a settlement statement is the same as a closing statement, though “settlement” is the formal term most likely to be used by the real estate industry.

What is an ‘excess deposit’ at closing?

A particular line item that causes confusion on the seller’s settlement statement is the “Excess Deposit.” What is an excess deposit, and who will receive the funds listed on that line?

What does an impound account do at closing?

At closing the buyer sets up an impound account that allows them to bundle the cost of their mortgage principal, taxes, mortgage insurance, and other monthly costs into one payment. The lender likes this because they can make sure the new owner will keep up to date with all the payments associated with the home.

What information is needed to complete a closing document?

At the top of the document (before you get to the portion that looks like a spreadsheet) you’ll see a few boxes for inputting information that records basic details about the transaction, such as the names of the buyer and seller, the property address, and the closing date.

What is a seller's net sheet?

The seller’s net sheet is not an official document but an organizational worksheet that your agent will fill out to estimate how much you’ll pocket from your home sale after factoring in expenses like taxes , your real estate agent’s commission, your remaining mortgage, and escrow fees.

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