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What is a HUD-1 Settlement Statement?
What is a HUD-1 Settlement Statement?
A HUD-1 Settlement Statement (often simply called a “HUD-1”) is a standardized form previously required by the U.S. Department of Housing and Urban Development (HUD) that itemizes all fees, charges, and credits for both the buyer and the seller in a real estate transaction. Here’s an overview:
- Purpose
- The HUD-1 details all costs involved in closing a real estate deal, including loan charges, title insurance, taxes, commissions, and any other settlement fees.
- It is designed to provide transparency about how much money each party pays or receives, ensuring both buyer and seller understand the financial breakdown.
- Replaced by the Closing Disclosure in Most Transactions
- In 2015, the TILA-RESPA Integrated Disclosure (TRID) rule went into effect, combining various loan disclosures. This rule introduced the Closing Disclosure (CD) to replace the HUD-1 in most mortgage transactions (specifically, most closed-end consumer mortgage loans).
- When is the HUD-1 still used? It remains in use primarily for reverse mortgages or certain other transactions that are exempt from TRID requirements.
- Key Sections
- Section A: Settlement Statement “header” with basic information (date, settlement agent, file number).
- Section B: Identifies the borrower, seller, and lender.
- Section C: Outlines loan terms.
- Sections 700–1400: Break down fees for taxes, title charges, commissions, loan origination, appraisals, inspections, etc.
- Buyer’s and Seller’s Columns
- The HUD-1 is organized in two parallel columns—one for the borrower (buyer) and one for the seller—making it clear who pays or receives what amounts at closing.
- Importance to Buyers and Sellers
- It helps prevent surprises at closing by itemizing every cost associated with the transaction.
- Buyers and sellers can review all fees in detail (including the lender’s fees, title charges, and government recording fees) before signing.
The HUD-1 Settlement Statement is a detailed summary of the financial aspects of a real estate closing. While the HUD-1 form has largely been replaced by the Closing Disclosure for standard home purchases and refinances, it still appears in certain circumstances, such as reverse mortgages.
