What is a HUD-1 Form?
HUD-1 Settlement Statements are standardized mortgage financing documents. In a consumer credit mortgage transaction, creditors or closing agents use this document to detail all buyer and seller costs and credits. Most reverse mortgages and mortgage refinancing transactions employ a HUD-1 form.
For most real estate transactions, the closing disclosure form replaced the HUD-1 form on October 3, 2015. However, if you apply for a mortgage before October 3, 2015, you will receive an HUD-1. Refinancings in non-seller transactions can use a HUD-1A form.
Borrowers now get a Closing Disclosure Form instead of a HUD-1 Form for most mortgage loans. The borrower must check either document before closing to avoid mistakes or unanticipated charges.
HUD-1 Form Understanding
The HUD-1 displays all transaction costs during closing. The form is a standard real estate settlement document that federal law requires for reverse mortgage and mortgage refinancing transactions.
The law requires borrowers to get a copy of the HUD-1 at least one day before settlement, although numbers can be added, rectified, or amended until the closing table.
Most buyers and sellers consult a real estate agent, attorney, or settlement agent to evaluate the document. The HUD-1 form calls buyers “borrowers” even without financing.
HUD-1 Form Contents?
Oddly, the HUD-1 should be considered first. The reverse side contains two columns: the left column lists borrower charges, and the right column lists seller costs.
The borrower’s list contains mortgage expenses, including loan origination, discount points, credit reports, appraisals, and flood certification fees. It may include prepaid interest, homeowner’s insurance, property taxes, lender’s title insurance, and closing agency costs.
The seller list may include real estate commission, buyer credit, and mortgage pay-off information. Sellers usually charge less than buyers.
Add the HUD-1 verso (back page) figures and transfer them to the form’s recto. The bottom of the first page lists the borrower’s and seller’s cash payments.
Special Considerations
Dodd-Frank Act Under the Wall Street Reform and Consumer Protection Act of 2010, lenders must submit a Closing Disclosure Form to borrowers of all mortgage types, except for reverse mortgages and mortgage refinances.
Mortgage loan discrimination is unlawful. You can take action if you feel discriminated against due to race, religion, sex, marital status, national origin, handicap, or age. Contact the Consumer Financial Protection Bureau or the U.S. Department of Housing and Urban Development (HUD) to report the issue.
Borrowers must get disclosure three days before closing. This five-page document covers the completed closing fees for the borrower, loan terms, expected monthly mortgage payments, and closing costs.
The three days allow the borrower to ask the lender questions and resolve cost disparities before closing.
HUD-1 Forms: Still Used?
Reverse mortgages and refinancing require HUD-1 forms. Real estate settlement agents utilized the government form to disclose all fees for which borrowers and sellers were accountable. The closing disclosure superseded HUD-1 in 2015.
What’s a reverse mortgage?
Reverse mortgages are for those over 62. Borrow against home equity for a lump amount, fixed income, or line of credit. The homeowner must repay the loan when they die, move, or sell.
When Is My Closing Disclosure?
The law requires you to obtain your closing disclosure three days before closing. Closing disclosures are not required for reverse mortgages and mortgages before October 3, 201d.
Conclusion
- All parties in reverse mortgage and mortgage refinancing transactions get the HUD-1 form, which lists closing fees.
- All other real estate transactions have used the closing disclosure since late 2015.
- Before closing, the borrower must check both to avoid mistakes or surprises.
