HUD 1 Settlement Statement
The HUD 1 Settlement Statement (also known as a Closing Statement) is the document you sign when you close on a mortgage. Unlike the application, once you sign the HUD1 the deal is done.
The Good Faith Estimate is one of the documents you get at application and is supposed to be the initial estimate of what will be on the final HUD 1. But, it doesn’t always work that way.
HUD 1 Definition
The HUD1 is a document required by RESPA (Real Estate Settlement and Procedures Act, the controlling Federal law) to show actual charges and adjustments for all parties including the seller, buyer, agents, lenders, and all third parties like originators.
Another name for the HUD1 is the HUD 1 closing statement or settlement statement. Most people in the mortgage industry just call it the “HUD”. But that can be confusing for some borrowers.
I had more than one borrower panic when they heard the word HUD1 closing because they thought they were buying a HUD home. It has nothing to do with what kind of mortgage you get or what kind of house you buy. Its job is to break out all the money in the transaction and show who paid what and who collected what.
HUD 1 Closing
A HUD1 is signed by the buyer, seller, and closing agent at closing. For a refinance, only the borrower and closing agent sign the HUD1.
There may also be a HUD 1 addendum with additional charges or payoffs not on the first or second page. For an FHA closing, a HUD 1 addendum states that if the closing agent has any information that the borrower’s contribution is anything other than their own the closing agent will not dispurse the funds until they get instructions from the lender.
The Good Faith Estimate is sometimes used more to get a borrower in the door than to accurately disclose the charges, fees, and adjustments. Many borrowers don’t see the real charges until the final HUD1 at closing and by then it is too late.
Along with many of the other costs, the HUD 1 taxes and insurance can also be disclosed on the Good Faith Estimate incorrectly. Since they are a part of the transaction, the originator may leave out the full escrow amount which makes the estimate look much better. But then you show up to closing with hundreds or thousands more required for taxes and insurance.
RESPA HUD1
You are going to have a tough time changing the HUD1 at closing so take advantage of the law.
Federal law allows for the HUD-1 to prepared for review 24 hours in advance of the closing.
But only if the borrowers request it.
Definitely request it. This is one weapon in the fight against last minute charges or “bait-n-switch” tactics.
Many times a refinance HUD 1 is not prepared until the day of signing sometimes even hours or minutes before signing. Put the loan officer on alert early in the process that you want a HUD1 closing statement 24 hours in advance.
The real estate agents on a purchase transaction are usually on the title company and loan officers case to get a copy of the HUD1 early so it may already be ready in advance but you have to ask for your copy too.
You can request it from your loan officer or the title company.
Keep your estimate from application and sit down to compare the estimate to the final HUD1. And speaking of keeping things.
Always keep your HUD 1 closing statement from every mortgage you get. I have seen many instances where a mortgage did not get recorded properly and the proof you paid it was your HUD 1. It also lists all mortgages, liens, debts, etc that got paid with the proceeds of the mortgage.
Author: The Mortgage Insider
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Is a HUD settlement form required for commercial short sale purchases ?
Every transfer of real estate or refinance of real estate is mandated to have a HUD-1 Closing Statement signed by all parties involved. Without such controls, calculating taxes and preventing money laundering would be impossible…
I am unable to locate my closing documents from a September 2005 refinancing. The mortgage broker states that their archives from 2005 are purged. The loan was sold to another firm. The current loan servicing company states since they did not originate the loan, they do not have the documents. The closing attorney states that because they only facilitated the closing and did not prepare the documents, they do not have to archive the documents. Plus the closing attorney merged with another firm and they are unsure where to find the documents.
I have problems accepting these explanations. Are these firms required to archive closing documents? How can I obtain copies of my closing paperwork?
If you can remember the name of the Title company or closing attorney…they can pull the closing documents.
The closing attorney states that because they only facilitated the closing and did not prepare the documents, they do not have to archive the documents. Plus the closing attorney merged with another firm and they are unsure where to find the documents.
Reggie,
If that is true…it’s a violation of RESPA law. The closing agent is responsible for tracking each closing with a government issued ID number and then can contact HUD using said number to retrieve closing documents. The closing agent, title company or atttorney doesn’t archive…HUD does…but they have access because they issued the control number. Recontact the attorney and see if they can at least dig up the control number for your closing…then ask them to contact HUD to retrieve the docs from the government.
If the attorney didn’t “prepare” the docs, at least, they could give you the number and possibly the name of the company that did prepare the docs…and you could contact them and HUD on your own.
The HUD-1 form I received only has my contributions (buyer) it does not include seller contributions. Is this customary and if so, can I still request to have the seller contributions listed on the HUD-1 as they were in the GFE?
Thanks!
April,
Absolutely. The HUD-1 is not complete until it has all parties contributions filled in. You have a legal right created by Federal law (RESPA ACT) to see a completed HUD-1 24 hours prior to closing…but ONLY IF YOU ASK! If you don’t ask…you don’t trigger the law. Many folks are TOLD the seller will pay costs, but it never makes it into the written contract. So when the closing happens the buyer is looking for the seller paid costs to show up…and they never do. It is rare that the closing agent would leave out seller paid costs if they are in the contract…but it does happen.
By all means re-read your contract…if the seller paid costs are not found in the contract, then the seller has no obligation to pay them. Those costs must be in writing to be valid. Get your agent to add an addendum getting the seller to pay the costs.
Good Luck
Should the seller get a copy of the HUD-1 also?
Yes…buyer, seller, both agents, mortgage lender, mortgage broker, and title company or closing agent….all get a copy of the HUD1.
If you lost your copy you could contact any one of the above to get another…however it is the title company that is required to provide you with another copy.
I requested a copy from the bank on a current Home Equity Line of Credit that I have had for 8 years and they don’t have one on file. Aren’t they required to have it?
Thanks!
Josh,
It’s the title company that closed the loan that will have the copy of the HUD1 you’re looking for. Of course, you, the borrower, and the bank, the lender, both got a copy at closing as well.
If you lost yours it’s conceivable, the lender lost there’s too.
Paul,
Excellent question and “no” they are not public record even though they are federally controlled.
I guess one could still request a HUD-1 through the Freedom of Information Act, but walking down to the local court house, won’t produce anything.
RKB
Are HUD 1 settlement sheets public record?