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The following
are instructions for completing Sections A through L
of the HUD - 1
settlement statement, required under Section 4 of RESPA and Regulation
X of the Department of Housing and Urban Development (24 CFR part
3500). This form is to be used as a statement of actual charges and
adjustments to be given to the parties in connection with the
settlement. The instructions for completion of the HUD - 1 are
primarily for the benefit of the settlement agents who prepare the
statements and need not be transmitted to the parties as an integral
part of the HUD - 1. There is no objection to the use of the HUD - 1
in transactions in which its use is not legally required. Refer to the
definitions section of Regulation X for specific definitions of many
of the terms which are used in these instructions.
Section A. This section requires
no entry of information.
Section B. Check appropriate loan
type and complete the remaining items as applicable.
Section C. This section provides
a notice regarding settlement costs and requires no additional entry
of information.
Sections D and E. Fill in the
names and current mailing addresses and zip codes of the Borrower and
the Seller. Where there is more than one Borrower or Seller, the name
and address of each one is required. Use a supplementary page if
needed to list multiple Borrowers or Sellers.
Section F. Fill in the name,
current mailing address and zip code of the Lender.
Section G. The street address of
the property being sold should be given. If there is no street
address, a brief legal description or other location of the property
should be inserted. In all cases give the zip code of the property.
Section H. Fill in name, address,
and zip code of settlement agent; address and zip code of ``place of
settlement.''
Section I. Date of settlement.
Section J. Summary of Borrower's
Transaction. Line 101 is for the gross sales price of the property
being sold, excluding the price of any items of tangible personal
property if Borrower and Seller have agreed to a separate price for
such items.
Line 102 is for the gross sales
price of any items of tangible personal property excluded from Line
101. Personal property could include such items as carpets, drapes,
stoves, refrigerators, etc. What constitutes personal property varies
from state to state. Manufactured homes are not considered personal
property for this purpose.
Line 103 is used to record the
total charges to Borrower detailed in Section L and totaled on Line
1400.
Lines 104 and 105 are for
additional amounts owed by the Borrower or items paid by the Seller
prior to settlement but reimbursed by the Borrower at settlement. For
example, the balance in the Seller's reserve account held in
connection with an existing loan, if assigned to the Borrower in a
loan assumption case, will be entered here. These lines will also be
used when a tenant in the property being sold has not yet paid the
rent, which the Borrower will collect, for a period of time prior to
the settlement. The lines will also be used to indicate the treatment
for any tenant security deposit. The Seller will be credited on Lines
404 - 405.
Lines 106 through 112 are for
items which the Seller had paid in advance, and for which the Borrower
must therefore reimburse the Seller. Examples of items for which
adjustments will be made may include taxes and assessments paid in
advance for an entire year or other period, when settlement occurs
prior to the expiration of the year or other period for which they
were paid. Additional examples include flood and hazard insurance
premiums, if the Borrower is being substituted as an insured under the
same policy; mortgage insurance in loan assumption cases; planned unit
development or condominium association assessments paid in advance;
fuel or other supplies on hand, purchased by the Seller, which the
Borrower will use when Borrower takes possession of the property; and
ground rent paid in advance.
Line 120 is for the total of
Lines 101 through 112.
Line 201 is for any amount paid
against the sales price prior to settlement.
Line 202 is for the amount of the
new loan made by the Lender or first user loan (a loan to finance
construction of a new structure or purchase of manufactured home where
the structure was constructed for sale or the manufactured home was
purchased for purposes of resale and the loan is used as or converted
to a loan to finance purchase by the first user). For other loans
covered by Regulation X which finance construction of a new structure
or purchase of a manufactured home, list the sales price of the land
on Line 104, the construction cost or purchase price of manufactured
home on Line 105 (Line 101 would be left blank in this instance) and
amount of the loan on Line 202. The remainder of the form should be
completed taking into account adjustments and charges related to the
temporary financing and permanent financing and which are known at the
date of settlement.
Line 203 is used for cases in
which the Borrower is assuming or taking title subject to an existing
loan or lien on the property.
Lines 204 - 209 are used for
other items paid by or on behalf of the Borrower. Examples include
cases in which the Seller has taken a trade-in or other property from
the Borrower in part payment for the property being sold. They may
also be used in cases in which a Seller (typically a builder) is
making an ``allowance'' to the Borrower for carpets or drapes which
the Borrower is to purchase separately. Lines 204 - 209 can also be
used to indicate any Seller financing arrangements or other new loan
not listed in Line 202. For example, if the Seller takes a note from
the Borrower for part of the sales price, insert the principal amount
of the note with a brief explanation on Lines 204 - 209.
Lines 210 through 219 are for
items which have not yet been paid, and which the Borrower is expected
to pay, but which are attributable in part to a period of time prior
to the settlement. In jurisdictions in which taxes are paid late in
the tax year, most cases will show the proration of taxes in these
lines. Other examples include utilities used but not paid for by the
Seller, rent collected in advance by the Seller from a tenant for a
period extending beyond the settlement date, and interest on loan
assumptions.
Line 220 is for the total of
Lines 201 through 219.
Lines 301 and 302 are summary
lines for the Borrower. Enter total in Line 120 on Line 301. Enter
total in Line 220 on Line 302.
Line 303 may indicate either the
cash required from the Borrower at settlement (the usual case in a
purchase transaction) or cash payable to the Borrower at settlement
(if, for example, the Borrower's deposit against the sales price
(earnest money) exceeded the Borrower's cash obligations in the
transaction). Subtract Line 302 from Line 301 and enter the amount of
cash due to or from the Borrower at settlement on Line 303. The
appropriate box should be checked.
Section K. Summary of Seller's
Transaction. Instructions for the use of Lines 101 and 102 and 104 -
112 above, apply also to Lines 401 - 412. Line 420 is for the total of
Lines 401 through 412.
Line 501 is used if the Seller's
real estate broker or other party who is not the settlement agent has
received and holds the deposit against the sales price (earnest money)
which exceeds the fee or commission owed to that party, and if that
party will render the excess deposit directly to the Seller, rather
than through the settlement agent, the amount of excess deposit should
be entered on Line 501 and the amount of the total deposit (including
commissions) should be entered on Line 201.
Line 502 is used to record the
total charges to the Seller detailed in Section L and totaled on Line
1400.
Line 503 is used if the Borrower
is assuming or taking title subject to existing liens which are to be
deducted from sales price.
Lines 504 and 505 are used for
the amounts (including any accrued interest) of any first and/or
second loans which will be paid as part of the settlement.
Line 506 is used for deposits
paid by the Borrower to the Seller or other party who is not the
settlement agent. Enter the amount of the deposit in Line 201 on Line
506 unless Line 501 is used or the party who is not the settlement
agent transfers all or part of the deposit to the settlement agent in
which case the settlement agent will note in parentheses on Line 507
the amount of the deposit which is being disbursed as proceeds and
enter in column for Line 506 the amount retained by the above
described party for settlement services. If the settlement agent holds
the deposit insert a note in Line 507 which indicates that the deposit
is being disbursed as proceeds.
Lines 506 through 509 may be used
to list additional liens which must be paid off through the settlement
to clear title to the property. Other payoffs of Seller obligations
should be shown on Lines 506 - 509 (but not on Lines 1303 - 1305).
They may also be used to indicate funds to be held by the settlement
agent for the payment of water, fuel, or other utility bills which
cannot be prorated between the parties at settlement because the
amounts used by the Seller prior to settlement are not yet known.
Subsequent disclosure of the actual amount of these post-settlement
items to be paid from settlement funds is optional. Any amounts
entered on Lines 204 - 209 including Seller financing arrangements
should also be entered on Lines 506 - 509.
Instructions for the use of Lines
510 through 519 are the same as those for Lines 210 to 219 above.
Line 520 is for the total of
Lines 501 through 519.
Lines 601 and 602 are summary
lines for the Seller. Enter total in Line 420 on Line 610. Enter total
in Line 520 on Line 602.
Line 603 may indicate either the
cash required to be paid to the Seller at settlement (the usual case
in a purchase transaction) or cash payable by the Seller at
settlement. Subtract Line 602 from Line 601 and enter the amount of
cash due to or from the Seller at settlement on Line 603. The
appropriate box should be checked.
Section L. Settlement Charges.
For all items except for those
paid to and retained by the Lender, the name of the person or firm
ultimately receiving the payment should be shown. In the case of ``no
cost'' or ``no point'' loans, the charge to be paid by the lender to
an affiliated or independent service provider should be shown as P.O.C.
(Paid Outside of Closing) and should not be used in computing totals.
Such charges also include indirect payments or back-funded payments to
mortgage brokers that arise from the settlement transaction. When
used, ``P.O.C.'' should be placed in the appropriate lines next to the
identified item, not in the columns themselves.
Line 700 is used to enter the
sales commission charged by the sales agent or broker. If the sales
commission is based on a percentage of the price, enter the sales
price, the percentage, and the dollar amount of the total commission
paid by the Seller.
Lines 701 - 702 are to be used to
state the split of the commission where the settlement agent disburses
portions of the commission to two or more sales agents or brokers.
Line 703 is used to enter the
amount of sales commission disbursed at settlement. If the sales agent
or broker is retaining a part of the deposit against the sales price
(earnest money) to apply towards the sales agent's or broker's
commission, include in Line 703 only that part of the commission being
disbursed at settlement and insert a note on Line 704 indicating the
amount the sales agent or broker is retaining as a ``P.O.C.'' item.
Line 704 may be used for
additional charges made by the sales agent or broker, or for a sales
commission charged to the Borrower, which will be disbursed by the
settlement agent.
Line 801 is used to record the
fee charged by the Lender for processing or originating the loan. If
this fee is computed as a percentage of the loan amount, enter the
percentage in the blank indicated.
Line 802 is used to record the
loan discount or ``points'' charged by the Lender, and, if it is
computed as a percentage of the loan amount, enter the percentage in
the blank indicated.
Line 803 is used for appraisal
fees if there is a separate charge for the appraisal. Appraisal fees
for HUD and VA loans are also included on Line 803.
Line 804 is used for the cost of
the credit report if there is a charge separate from the origination
fee.
Line 805 is used only for
inspections by the Lender or the Lender's agents. Charges for other
pest or structural inspections required to be stated by these
instructions should be entered in Lines 1301 - 1305.
Line 806 should be used for an
application fee required by a private mortgage insurance company.
Line 807 is provided for
convenience in using the form for loan assumption transactions.
Lines 808 - 811 are used to list
additional items payable in connection with the loan including a CLO
Access fee, a mortgage broker fee, fees for real estate property taxes
or other real property charges.
Lines 901 - 905. This series is
used to record the items which the Lender requires (but which are not
necessarily paid to the lender, i.e., FHA mortgage insurance premium)
to be paid at the time of settlement, other than reserves collected by
the Lender and recorded in 1000 series.
Line 901 is used if interest is
collected at settlement for a part of a month or other period between
settlement and the date from which interest will be collected with the
first regular monthly payment. Enter that amount here and include the
per diem charges. If such interest is not collected until the first
regular monthly payment, no entry should be made on Line 901.
Line 902 is used for mortgage
insurance premiums due and payable at settlement, except reserves
collected by the Lender and recorded in the 1000 series. A lump sum
mortgage insurance premium paid at settlement should be inserted on
Line 902, with a note that indicates that the premium is for the life
of the loan.
Line 903 is used for hazard
insurance premiums which the Lender requires to be paid at the time of
settlement except reserves collected by the Lender and recorded in the
1000 series.
Lines 904 and 905 are used to
list additional items required by the Lender (except for reserves
collected by the Lender and recorded in the 1000 series) including
flood insurance, mortgage life insurance, credit life insurance and
disability insurance premiums. These lines are also used to list
amounts paid at settlement for insurance not required by the Lender.
Lines 1000 - 1008. This series is
used for amounts collected by the Lender from the Borrower and held in
an account for the future payment of the obligations listed as they
fall due. Include the time period (number of months) and the monthly
assessment. In many jurisdictions this is referred to as an
``escrow'', ``impound'', or ``trust'' account. In addition to the
items listed, some Lenders may require reserves for flood insurance,
condominium owners' association assessments, etc.
After itemizing individual
deposits in the 1000 series using single-item accounting, the servicer
shall make an adjustment based on aggregate accounting. This
adjustment equals the difference between the deposit required under
aggregate accounting and the sum of the deposits required under
single-item accounting. The computation steps for both accounting
methods are set out in 3500.17(d). The adjustment will always be a
negative number or zero (-0-). The settlement agent shall enter the
aggregate adjustment amount on a final line in the 1000 series of the
HUD - 1 or HUD - 1A statement.
During the phase-in period, as
defined in 3500.17(b), an alternative procedure is available. If a
servicer has not yet conducted the escrow account analysis to
determine the aggregate accounting starting balance, the settlement
agent may initially calculate the 1000 series deposits for the HUD - 1
and HUD - 1A settlement statement using single-item analysis with a
one-month cushion (unless the mortgage loan documents indicate a
smaller amount). In the escrow account analysis conducted within 45
days of settlement, the servicer shall adjust the escrow account to
reflect the aggregate accounting balance.
Lines 1100 - 1113. This series
covers title charges and charges by attorneys. The title charges
include a variety of services performed by title companies or others
and includes fees directly related to the transfer of title (title
examination, title search, document preparation) and fees for title
insurance. The legal charges include fees for Lender's, Seller's or
Buyer's attorney, or the attorney preparing title work. The series
also includes any fees for settlement or closing agents and notaries.
In many jurisdictions the same person (for example, an attorney or a
title insurance company) performs several of the services listed in
this series and makes a single overall charge for such services. In
such cases, enter the overall fee on Line 1107 (for attorneys), or
Line 1108 (for title companies), and enter on that line the item
numbers of the services listed which are covered in the overall fee.
If this is done, no individual amounts need be entered into the
borrower's and seller's columns for the individual items which are
covered by the overall fee. In transactions involving more than one
attorney, one attorney's fees should appear on Line 1107 and the other
attorney's fees should be on Line 1111, 1112 or 1113. If an attorney
is representing a buyer, seller, or lender and is also acting as a
title agent, indicate on line 1107 which services are covered by the
attorney fee and on line 1113 which services are covered by the
insurance commission.
Line 1101 is used for the
settlement agent's fee.
Lines 1102 and 1103 are used for
the fees for the abstract or title search and title examination. In
some jurisdictions the same person both searches the title (that is,
performs the necessary research in the records) and examines title
(that is, makes a determination as to what matters affect title, and
provides a title report or opinion). If such a person charges only one
fee for both services, it should be entered on Line 1103 unless the
person performing these tasks is an attorney or a title company in
which case the fees should be entered as described in the general
directions for Lines 1100 - 1113. If separate persons perform these
tasks, or if separate charges are made for searching and examination,
they should be listed separately.
Line 1104 is used for the title
insurance binder which is also known as a commitment to insure.
Line 1105 is used for charges for
preparation of deeds, mortgages, notes, etc. If more than one person
receives a fee for such work in the same transaction, show the total
paid in the appropriate column and the individual charges on the line
following the word ``to.''
Line 1106 is used for the fee
charged by a notary public for authenticating the execution of
settlement documents.
Line 1107 is used to disclose the
attorney's fees for the transaction. The instructions are discussed in
the general directions for Lines 1100 - 1113. This line should include
any charges by an attorney to represent a buyer, seller or lender in
the real estate transaction.
Lines 1108 - 1110 are used for
information regarding title insurance. Enter the total charge for
title insurance (except for the cost of the title binder) on Line
1108. Enter on Lines 1109 and 1110 the individual charges for the
Lender's and owner's policies. Note that these charges are not carried
over into the Borrower's and Seller's columns, since to do so would
result in a duplication of the amount in Line 1108. If a combination
Lender's/owner's policy is purchased, show this amount as an
additional entry on Lines 1109 and 1110.
Lines 1111 - 1113 are for the
entry of other title charges not already itemized. Examples in some
jurisdictions would include a fee to a private tax service, a fee to a
county tax collector for a tax certificate, or a fee to a public title
registrar for a certificate of title in a Torrens Act transaction.
Line 1113 should be used to disclose services that are covered by the
commission of an attorney acting as a title agent when Line 1107 is
already being used to disclose the fees and services of the attorney
in representing the buyer, seller, or lender in the real estate
transaction.
Lines 1201 - 1205 are used for
government recording and transfer charges. Recording and transfer
charges should be itemized. Additional recording or transfer charges
should be listed on Lines 1204 and 1205.
Lines 1301 and 1302 are used for
fees for survey, pest inspection, radon inspection, lead-based paint
inspection, or other similar inspections.
Lines 1303 - 1305 are used for
any other settlement charges not referable to the categories listed
above on the HUD - 1, which are required to be stated by these
instructions. Examples may include structural inspections or pre-sale
inspection of heating, plumbing, or electrical equipment. These
inspection charges may include a fee for insurance or warranty
coverage.
Line 1400 is for the total
settlement charges paid from Borrower's funds and Seller's funds.
These totals are also entered on Lines 103 and 502, respectively, in
sections J and K.
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