“HUD-1” Training
Completing the new HUD-1
Desktop Underwriter is a registered trademark of Fannie Mae. Loan Prospector is a registered trademark of Freddie Mac. This presentation is a
summary and is not complete. This information is for mortgage professionals only and should not be distributed to or used by consumers or other
third-parties. Information is accurate as of the date shown below and is subject to change without notice. 7/14/2010
Topics of Discussion
• Introduction / Purpose of the HUD-1
• Completing the New HUD-1 Settlement
Statement
• Trainings and Support
FIRST MORTGAGE
Introduction / Purpose
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The HUD-1 Settlement Statement is required under Section 4
of the RESPA and 24 CFR part 3500 (Regulation X).
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This form is to be used as a statement of actual charges and
adjustments paid by the borrower and the seller – to be given
to the parties in connection with the settlement.
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The HUD-1 is prepared by the settlement agent to itemize all
charged imposed upon the Borrower and the Seller by the
loan originator and all sales commissions, whether to be paid
at settlement or outside of settlement, and any other charges
which either the Borrower or the Seller will pay at settlement.
FIRST MORTGAGE
HUD-1
Completing the “new’ HUD-1
Settlement Statement
HUD-1 Page 1
Identifications
First Mortgage Corporation
Henny Doe
HUD-1 Page 1
The Transaction
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The 100 and 400 subsections of Part J and K have not changed.
Closing agents may still offer separate settlement statements to the buyer
and seller showing only their part of the transaction.
Technical and inadvertent errors, and tolerance violations, may be
corrected, and a revised HUD settlement statement be provided within 30
days of closing.
104 & 105: These lines are for additional items owed by the borrower
that are not on the GFE and items paid by the seller prior to
settlement and being reimbursed to the seller from the borrower at
settlement.
HUD-1, Page 1
Credits and Debits
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Seller credits (also called seller concessions or seller contributions) go on
lines 204-209, and 506-509 as a credit to the borrower and a payment to
the seller.
Deposits held by the broker are shown as payments to the broker on line
501, instead of being included as part of the broker commission on page 2.
Second mortgage loan net disbursements must be shown on lines 204-209
(the lender is named and the loan amount is shown in parentheses).
200 Series: If the Seller is paying any of the buyers closing costs, the
charges must show on page 2 as a charge to the buyer, with an
offsetting credit here from the sellers.
HUD-1, Page 1
Credits and Debits cont’d…
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Borrower POC payments (eg., application fees) are shown on lines 204209 as credits.
Real Estate broker credits must name the individual giving the credit (not
the company). HUD did not provide any guidance on how to determine
who contributes this credit, or whether the name of the broker, the
salesperson, or the clerk writing the check is on the HUD-1. This also
conflicts with state law.
500 Series: The owner’s title insurance must show as a charge to the
borrower on page 2 of the HUD with a credit back from the seller here
(as long as the seller’s paying for it).
HUD-1, Page 1
Adjustments
• Lines 210 to 303 and 510 to 603 have not changed.
HUD-1, Page 2
Broker Commissions
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Only the portion of the commission net of the earnest money deposit is
shown on page 2 in the 700 series.
Percentages used to calculate commissions are no longer disclosed.
701 - 703: The commission box no longer has percentages, instead it
indicates actual fees. The total amount of commission to each real
estate broker or agent must be shown on lines 701 and 702. The
amount of the commissions disbursed at settlement must be shown
on line 703.
HUD-1, Page 2
Origination Fees
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The “origination charge” is a lump sum adding lender and broker fees. Add “” “”
to designate that the origination fee may be deductible for income tax purposes.
The YSP and any other lender credits are shown as a negative number on Line
802.
In a no fee loan, the lender makes up phantom origination and discount fees for
Line 801, and issues an equal credit on Line 802.
801: This line is used to record “Our origination charge” and includes all
charges received by a loan originator, except for any additional charge
(“points”) for the interest rate chosen on the loan. The amount on line 801
also includes all amounts received for any service, including administrative
and processing services, performed by or on behalf of the lender or any
mortgage broker.
802: Use to record “Your credit or charge (points) for the specific interest
rate chosen and must not be listed in either column or shown on page 1.
HUD-1, Page 2
Origination Fees cont’d…
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Only fees that are paid by the seller and never paid by the borrower are
included in the seller’s column.
Fees paid by the seller and broker at or before closing (pursuant to
negotiations) for services required by the lender are shown as borrower
paid fees, and a credit is given in the 200 series (seller paid fees are also
shown in the 500 series). Credits for fees paid before closing are also
shown on Page 1 of the HUD-1.
Third party administration and processing fees are not shown as POC
items.
HUD-1, Page 2
Origination Fees cont’d…
• Appraisals, credit reports, flood searches, tax service,
surveys required by the lender, and governmental loan
program charges, such as VA, FHA, Rural Housing Service,
or state bond loan programs, are not “administration or
processing” costs or origination fees, and are shown as
separate borrower charges and not as part of the
“origination fee” in the 800 series (don’t ask me why).
• Services are shown in the 800 series if the borrower picks a
provider identified by the lender, but in the 1300 series if the
provider was not identified by the lender. Given that the
lender must list the available providers, the lender violates
RESPA if the borrower picks someone off the list.
HUD-1, Page 2
Insurance and Escrow
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The 900 and 1000 series have not changed, except HUD hard coded the
Aggregate Adjustment on line 1007.
The Aggregate Adjustment has not changed.
MIP cannot increase from the GFE.
All other charges in these sections are not subject to any limits on changes
from amounts on the GFE.
1000 Series: The impound accounts now will roll up into one total with
the breakdown shown outside the column.
HUD-1, Page 2
Title Fees
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Line 1101 includes the lender’s title insurance premium, closing fee, wire
and fax fees, title doc prep charges, title search fee, overnight delivery fee,
notary fees, survey fees required by the title company, and other title and
closing agent admin and processing fees. These fees are not separately
itemized.
Line 1101 includes room rental fees and other suspicious title agency
charges.
The closing fee, survey fee, lender’s title policy, and owner’s title premium
are broken out as POC items.
The portion of the premium retained by the title agency and underwriter are
disclosed as POC items.
HUD-1, Page 2
Title Fees cont’d…
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Survey fees are included in Line 1101 and placed on a line after 1108 as a
POC item if the survey is required by the Title agency to issue the policy.
Surveys required by the lender are disclosed in the 800 series, unless the
borrower selected a surveyor that was not identified by the lender (in which
case the survey goes in the 1300 series).
Other third party fees, such as independent contractor notary fees and title
plant fees, are shown as POC items on lines 1109 to 1112.
Title fees are generally subject to the 10% tolerance.
1101: All of the Borrower’s title and escrow fees are now rolled up
into line 1101 with the exception of the owner’s title insurance which
is shown as a charge to the borrower on line 1103.
HUD-1, Page 2
Title Fees cont’d…
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1103: Buyer will be charged for the owner’s policy to conform with
Box #5 on the GFE, but if the contract calls for the seller to pay for the
owners policy a credit/debit will be shown in the 200 series.
Remember, some bank owned or FannieMae contracts will have the
buyer purchasing the owners policy.
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1107: Reflects the title issuing agent’s portion of the title premiums &
endorsements.
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1108: Reflects the title underwriter’s portion of title premiums &
endorsements.
HUD-1, Page 2
Government Charges
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Line 1201 is the total of the government recording charges. Examples of
such charges include but are not limited to:
– State and local fees for recording the deed, mortgage, deed of trust,
releases, and
– Any other instrument recorded or document recorded to preserve
marketable title or to perfect the lender’s security interest in the
property.
There is a 10% aggregate tolerance for recording fees and fees for
services from providers identified or required by the lender or broker.
The transfer taxes however, must be absolutely correct.
HUD-1, Page 2
Borrower Selected Services
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These are services the borrower shops for, such as home inspections, that
(i) the lender requires but does not dictate who can provide the service
(and does not identify the provider chosen by the borrower), or (ii) the
lender does not require.
A list of all such services and the available providers must accompany the
GFE.
The fees for these services can change at any time without causing a
violation.
1300 Series: Will be used for anything that was in Box #6 on the GFE.
HUD-1, Page 2
Disclosing Points
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Includes Origination Points.
Discount points that might be deductible are shown in the margin at the
bottom of the 2nd page (where you would ordinarily put a signature block)
on the bottom of the 2nd page of the HUD-1.
Note that HUD-1 instructions say that Line 801 cannot include points. HUD
contradicts itself in the FAQ.
The amount on IRS Form 1098 is disclosed below Line 1400.
HUD-1, Page 3
Origination Fees
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Category 1: This section will compare the GFE to the HUD figures.
Changes in Category 1 CAN NOT increase at closing.
The 3rd page of the HUD-1 is all new. The Lender is responsible for
providing all information needed by the closing agent to complete this
page.
Note that broker and lender fees cannot increase (they can decrease), and
that the credit from the lender to the borrower cannot increase. HUD
should have said this fee cannot change.
The amount paid to the broker need not correspond to the amount in Line
802.
Do not confuse Transfer Taxes with Recording Fees – the former cannot
change from the amount disclosed in the GFE, and the latter is subject to
an aggregate 10% tolerance.
HUD-1, Page 3
10% Tolerance
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Category 2: Changes in Category 2 CAN NOT increase in total by
more than 10% at closing.
This section includes all of the fees disclosed in Section 3 of the GFE.
Aggregating all of the fees and providing a 10% tolerance for the sum gives
everyone a little breathing room – some fees can be higher or lower
without causing a violation.
Lenders may cram down one provider so the total fees are within
tolerance.
HUD-1, Page 3
10% Tolerance
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What to remember (weird stuff):
– Title insurance premium disclosures are subject to a tolerance, but
hazard, earthquake and flood insurance premiums have no limit.
– Fees paid by the seller, broker and the lender that are disclosed as
borrower paid fees are subject to the 10% tolerance.
– It makes sense for the broker or lender to disclose the highest fees on
its list of providers in the GFE.
HUD-1, Page 3
Insurance and Escrow
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Category 3: Changes in Category 3 CAN increase or decrease at
closing.
These are fees that can change. These fees are from the 900, 1000 and
the 1300 series.
Note: Title fees cannot increase unless the borrower asks for additional
coverage's (which is considered a changed circumstance).
HUD-1, Page 3
Loan Terms
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Loan Terms: Loan
Terms are disclosed to
consumers in a
simplified format in
this section.
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Loan terms at the
bottom of page 3 must
be provided by the
lender (do not try this at
home)
HUD-1, Page 3
Loan Terms cont’d…
• FHA no longer have a “prepayment penalty” in the eyes
of RESPA and TILA.
Tips…
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If a seller pays for a charge that was included on the GFE,
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If a loan originator (other than for no-cost loans), real estate agent, other
settlement service provider, or other person pays for a charge that was
included on the GFE,
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The charge should be listed in the borrower’s column on Page 2 of the
HUD-1.
That charge should also be offset by listing a credit in that amount to the
borrower on lines 204-209 on page 1 of the HUD-1,
… and by a charge to the seller in lines 506-509 on page 1 of the HUD-1
The charge should be listed in the borrower’s column on page 2 of the
HUD-1.
… with an offsetting credit reported on page 1 of the HUD-1, identifying the
party paying the charge.
Charges paid outside of settlement by the borrower, seller, loan originator,
real estate agent, or any other person, must be included on the HUD-1 but
marked “P.O.C.” for “Paid Outside of Closing” (settlement) and must not be
included in computing totals.
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However, indirect payments from a lender to a mortgage broker may not be
disclosed as POC and must be included as a credit on Line 802.
HUD-1
Final Thoughts…
• You can add an addendum page instead of placing
information in the margin.
• Tolerances for MDIA and RESPA are different issues
and are calculated differently (and separately).
• There are no penalties under RESPA for violations, but
the State can fine parties for RESPA violations.
• YOU HAVE NO OBLIGATION TO EXPLAIN THE GFE OR
THE HUD-1 TO ANY BORROWER OR SELLER!!!
– The Lender is the only party obligated to explain the
loan terms and the settlement statement.
New “HUD-1”
IMPLEMENTATION DATE
New HUD-1 will apply to all loans for which
creditor receives an application on or after
January 1, 2010
FMC Training & Support
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First Mortgage is committed to providing ongoing trainings on the
new RESPA Reform
1.
RESPA Overview Training / Completing the GFE DONE
2.
Completing the HUD-1 Settlement Statement DONE
3.
Point Training – You need Point Version 7.2 DONE
4.
FirstBase Training – FMC internal LOS system DONE
5.
FMC Process Training – DONE
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HUD is seeking legislation to determine how to assess penalties for noncompliance so BE PREPARED!!!
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Train your internal teams/staff on the new RESPA rules, GFE, and any new
software requirements
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DOCUMENTATION is the key!
FIRST MORTGAGE
FIRST MORTGAGE
On behalf of First Mortgage,
thank you for joining today’s
training and we hope the
information provided will help
you build your business!