HUD-1 Form

The HUD-1 Form, also known as the Closing Disclosure Form, is a pivotal document in the real estate settlement process in the United States. This comprehensive document details all the financial transactions between the buyer, seller, and lender during the sale or refinancing of real estate property. The form is mandated by the Real Estate Settlement Procedures Act (RESPA) and is managed by the U.S. Department of Housing and Urban Development (HUD). Understanding the HUD-1 form is crucial for anyone involved in real estate transactions, as it provides a clear breakdown of all costs and ensures transparency in the closing process.

Overview of the HUD-1 Form

The HUD-1 form includes several pages, each with different sections and fields that must be completed accurately to reflect the transaction’s financial details. It is broken down into three main parts:

General Information: This section provides basic information about the transaction, including the names and addresses of the buyer, seller, and lender, the property address, and the date of closing.
Summary of Borrower’s and Seller’s Transactions: This part lists all the financial transactions between the buyer and seller, including the contract sales price, settlement charges, and any other adjustments or credits.
Itemized Charges: The final portion itemizes all the individual charges and fees related to the transaction, such as loan origination fees, appraisal fees, title insurance, and recording fees.

Detailed Breakdown of Sections

Section A: General Information

This section includes:

Date of Closing: The exact date when the transaction is finalized.
Property Location: The address of the property being sold or refinanced.
Type of Loan: The specific loan type, such as conventional, FHA, VA, or other.
Loan Number: The unique identifier for the loan.

Section B: Buyer/Borrower Information

In this section, the details of the buyer or borrower are documented, encompassing:

Name and Address: The full name and current address of the buyer.
Lender’s Contact Information: Details related to the lending institution, including name and contact information.

Section C: Seller Information

Here, the seller’s details are specified, including:

Name and Address: The full name and address of the seller.

Section D: Loan Charges

This section itemizes all the loan-specific charges the buyer will incur, such as:

Origination Fee: Charges for processing the loan.
Discount Points: Fees paid to reduce the interest rate.
Appraisal Fee: Costs associated with the property appraisal.

Section E: Taxes and Other Government Fees

Breakdown of taxes and fees paid to the government, including:

Recording Fees: Costs for recording the deed and mortgage.
Transfer Taxes: Taxes assessed when ownership transfers.

Section F: Prepaid Items

This section details items that the borrower pre-pays, such as:

Prepaid Interest: Interest paid upfront.
Property Taxes: Taxes paid in advance.
Homeowner’s Insurance: Insurance premiums paid upfront.

Section G: Initial Escrow Payment at Closing

Here, the initial deposits made into the escrow account are listed, covering:

Escrow Deposits: Payments for property taxes and insurance to be held in escrow.

Section H: Title Charges

Charges related to title insurance and settlement services are itemized here, including:

Title Search Fee: Costs for searching the property’s title.
Title Insurance: Insurance to protect against title defects.

Section I: Additional Settlement Charges

Other charges associated with the settlement process are detailed in this section, including:

Survey Fee: Costs associated with surveying the property.
Pest Inspection Fee: Fees for pest inspections.

Use of the HUD-1 Form

Real estate professionals, buyers, and sellers use the HUD-1 form during the final stages of a real estate transaction. It ensures that all parties are aware of the exact financial breakdown, promoting transparency and avoiding any surprises at closing. The form must be reviewed by all parties, and any discrepancies should be addressed before finalizing the transaction.

Recent Changes and Regulations

In 2015, the HUD-1 form was replaced by the Closing Disclosure form for most residential real estate transactions due to the implementation of the TILA-RESPA Integrated Disclosure (TRID) rule by the Consumer Financial Protection Bureau (CFPB). However, the HUD-1 form is still used for reverse mortgages and certain other types of real estate transactions. The TRID rule aims to simplify paperwork, making it easier for consumers to understand their loan terms and associated costs.

More information can be found on the U.S. Department of Housing and Urban Development website.