Definition
The Uniform Settlement Statement, commonly referred to as the HUD-1 Form, is a detailed document that is required by the Real Estate Settlement Procedures Act (RESPA) for any federally related mortgage. This form, which must be prepared by the party handling the closing (often a closing agent or attorney), is designed to provide in-depth information about all the costs and fees involved in a real estate transaction. It must be given to both the buyer and the seller to ensure full transparency about the closing costs.
Examples
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Example 1: Residential Home Sale
- A homebuyer purchasing a residential property will receive the HUD-1 Form. This form will detail all charges, such as loan origination fees, title insurance, recording fees, and prepaid interest, providing a clear statement of the total funds required for the transaction.
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Example 2: Refinance of Mortgage
- When a homeowner refinances their mortgage, they will also receive a HUD-1 Statement. This document outlines all the costs associated with refinancing, including the new loan amount, fees paid to the lender, and any adjustments for property taxes or insurance.
Frequently Asked Questions (FAQs)
Q: Who is responsible for preparing the Uniform Settlement Statement?
A: The closing agent, which may be a title company representative, real estate attorney, or other authorized individual, is responsible for preparing the HUD-1 Form.
Q: When should the buyer and seller receive the HUD-1 Form?
A: According to RESPA, buyers and sellers should receive a copy of the HUD-1 Form at least one day prior to the closing of the real estate transaction.
Q: What information is included in the HUD-1 Form?
A: The HUD-1 Form includes a detailed list of all charges and credits involved in the transaction, including loan origination fees, title insurance, notary fees, and prorated taxes.
Q: Is the HUD-1 Form still mandatory for all home purchases?
A: As of October 2015, the HUD-1 Form has been largely replaced by the Closing Disclosure Form for most residential property purchases, due to the implementation of the TILA-RESPA Integrated Disclosure (TRID) rule. However, the HUD-1 is still used for reverse mortgages and HELOCs.
Q: Can the figures on a HUD-1 Form change before closing?
A: Yes, the figures can change if there are changes in loan terms or closing costs prior to the final closing. Buyers should review the final statement carefully before signing.
Related Terms
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Closing Disclosure (CD): A five-page form that provides final details about the mortgage loan, including the loan terms, projected monthly payments, and closing costs. It replaced the HUD-1 Form for most residential properties in 2015.
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RESPA: The Real Estate Settlement Procedures Act, a federal law designed to provide homebuyers and sellers with increased transparency about the costs of a real estate transaction and to eliminate abusive practices in the real estate settlement process.
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Title Insurance: A form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in title to a property.
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Prorated Taxes: Taxes that are proportionally divided based on a specific period related to the time of ownership or coverage, often included in the closing process.
Online Resources
- U.S. Department of Housing and Urban Development (HUD) - RESPA
- Consumer Financial Protection Bureau (CFPB) - Your Home Loan Toolkit
- RESPA Compliance Guide
References
- “Real Estate Settlement Procedures Act (RESPA) – U.S. Department of Housing and Urban Development,” HUD.
- “What is a HUD-1 Statement?” by Consumer Financial Protection Bureau (CFPB).
- Flood, J. A., & Sossin, L. (2013). Understanding Real Estate Exposures. Oxford University Press.
Suggested Books for Further Studies
- “Real Estate Transactions: Problems, Cases, and Materials” by Robin Paul Malloy and James Charles Smith.
- “Fundamentals of Real Estate Law” by Wayne R. Archer, William J. Roark, and Stephen Harbor.
- “Modern Real Estate Practice” by Fillmore W. Galaty, Wellington J. Allaway, and Robert C. Kyle.
