What is a 'HUD-1 Form'

The HUD-1 Settlement Statement is a form prepared by closing agents itemizing all charges imposed on a buyer and a seller in real estate transactions. The HUD-1 is used primarily to settle reverse mortgage and mortgage refinance transactions. As of October 3, 2015, all other types of real estate transactions use the Closing Disclosure form.

BREAKING DOWN 'HUD-1 Form'

The HUD-1 gives a picture of the closing transaction and provides each party with a complete list of incoming and outgoing funds. The Real Estate Settlement Procedures Act (RESPA) requires the HUD-1 be used as the standard real estate settlement form in reverse mortgage and mortgage refinance transactions. Settlement agents also prepare HUD-1s to close transactions in which the borrowers applied for their mortgage before Oct. 3, 2015.

RESPA requires that borrowers be given a copy of the HUD-1 at least one day prior to settlement, although figures can be added or updated up to the time the parties are seated at the closing table. Most buyers and sellers study the form with their real estate agent, attorney or the settlement agent. The more people who review it, the greater the likelihood of detecting errors. On the HUD-1 form, "buyers" are referred to as "borrowers" even if no loan is involved.

HUD-1 Itemized Charges

The HUD-1 is meant to be reviewed verso, or reverse side, first. The verso has two columns: The left-hand column itemizes the borrower's charges, and the right-hand column itemizes the seller's charges. The borrower's charges include mortgage fees such as the loan origination fee, discount points, a credit report, and appraisal and flood certification fees. Borrower charges itemized also include prepaid interest cost, homeowner's insurance fees, property taxes, owner's and lender's title insurance, and the closing agent's fees. The itemized seller charges include real estate commission, any contractually agreed-upon credit to the buyer and mortgage pay-off information, if any. The seller's itemized charges typically are lower than the buyer's charges. The figures on the HUD-1 verso are added up, and the totals are carried to the form's recto, or front side. The amount of cash required from the borrower and the amount to be given to the seller appear at the bottom of the recto.

Closing Disclosure

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires lenders to provide borrowers of all types of mortgages — other than reverse mortgages and mortgage refinances — with a closing disclosure. Under the TILA-RESPA Integrated Disclosure rule, borrowers must be provided with the disclosure three days before closing. The five-page disclosure includes finalized figures of the cost of the borrower's mortgage and closing costs. The three days allow borrower to ask the lender questions and clear up any discrepancies or misunderstandings regarding costs before closing.

RELATED TERMS
  1. Yield Spread Premium

    A form of compensation that a mortgage broker, acting as the ...
  2. No-Cost Mortgage

    A mortgage refinancing situation in which the lender pays the ...
  3. Good Faith Estimate

    An estimate of the fees due at closing for a mortgage loan that ...
  4. Negative Points

    A cash rebate paid by lenders to a mortgage broker or the borrower ...
  5. Closing Costs

    The expenses, over and above the price of the property that buyers ...
  6. Settlement Agent

    1. The party involved in completing a transaction between a buyer ...
Related Articles
  1. Investing

    HUD-1 Form: What Must Be On It

    You can't close on property involving federally related mortgages without a HUD-1 form. Use these instructions for a correct form so you close on time.
  2. Personal Finance

    Watch Out for "Junk" Mortgage Fees

    So many fees are tacked onto a mortgage, that it's easy to pay more than you have to.
  3. Investing

    Becoming a Real Estate Agent Or Mortgage Broker

    Considering a career as either a real estate agent or a mortgage broker? Here are some factors that might help you choose between them.
  4. Investing

    Understanding Real Estate Commissions: Who Pays?

    When you set out to buy or sell a house, one factor worth considering is the real estate agent's fees.
  5. Investing

    Career Comparison: Real Estate Agent Or Mortgage Broker

    If you're considering one of these careers, this article is designed to help you make a logical choice between the two.
  6. Personal Finance

    How Regulations Protect Reverse Mortgage Borrowers

    They're complex animals, which is why there are government guidelines in place to protect borrowers.
  7. Personal Finance

    Can a Mortgage Company Change the Terms?

    Buying a home? You'll need this guide on when a mortgage company can change your terms and why various closing costs can go up – or down.
  8. Investing

    5 Ways To Save On Real Estate Fees

    Even a 1% reduction in real estate commissions can save you thousands of dollars.
  9. Personal Finance

    What The New Mortgage Lending Rules Really Mean

    Every mortgage rule change has consequences for borrowers, lenders, the housing market and the broader economy.
RELATED FAQS
  1. How have low interest rates affected the real estate sector?

    Learn how low interest rates stimulate the real estate sector by making it more affordable to borrow money to invest in real ... Read Answer >>
  2. When Do Mortgage Payments Usually Start?

    Discover when your first mortgage payment is due and how it differs from rent. Learn about the closing process and why you ... Read Answer >>
  3. Are good faith estimates (GFEs) accurate?

    Learn how federal guidelines regarding good faith estimates protect consumers under the revised 2010 version of the Real ... Read Answer >>
  4. Who regulates mortgage lenders?

    The Federal Truth in Lending Act and the Real Estate Settlement Procedures Act (RESPA) dictate most of the regulations mortgage ... Read Answer >>
  5. What Home-Buying Costs Can I Deduct from Taxes?

    Except for interest, points, real estate taxes and PMI, costs to acquire a home increase the asset’s tax basis and are not ... Read Answer >>
Hot Definitions
  1. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  2. Life Insurance

    A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the ...
  3. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center