The HUD-1 is a form used by the settlement agent to itemize all charges imposed upon a borrower and seller for a real estate transaction. It gives each party a complete list of their incoming and outgoing funds.
Fees associated with the transaction but paid prior to closing are also included on the HUD. They are normally marked "POC," for Paid Outside of Closing.
When is the HUD-1 Used?
The statutes of the Real Estate Settlement Procedures Act (RESPA) require the form be used as the standard real estate settlement form in all transactions in the United States which involve federally related mortgage loans. It’s used for nearly all transactions that involve a buyer and seller, including cash closings.
When is the HUD-1 Distributed?
RESPA states you should be given a copy of the HUD-1 at least one day prior to settlement. In real life, entries may still be coming in a few hours before closing. Most buyers and sellers study the statement on their own, with their real estate agent, and with the settlement agent. The more people who review it, the more likely that errors will be detected.
Settlement charges (closing costs) are categorized on the HUD-1 into seven series sections as follows:
- 700 Series Line Items (Total Sales/Broker's Commission) detail the realtor's commissions.
- 800 Series Line Items (Items Payable In Connection With Loan) detail the charges of the mortgage lender and/or mortgage broker.
- 900 Series Line Items (Items Required By Lender To Be Paid In Advance) detail any required prepaid interest charged by the lender as well as any homeowner's/hazard insurance premiums, mortgage insurance premiums, etc.
- 1000 Series Line Items (Reserves Deposited With Lender) detail the number of months and monthly amounts required by the lender for establishing an escrow account to pay for real estate taxes, or any other assessments required to be held in escrow.
- 1100 Series Line Items (Title Charges) detail the fees and costs charged by the closing agent for coordinating closing with the parties, conducting the closing, and issuing title insurance.
- 1200 Series Line Items (Government Recording and Transfer Charges) detail the recording fees, state/county/city transfer and recordation taxes, and any other governmental tax assessed for the transfer or recording of instruments.
- 1300 Series Line Items (Additional Settlement Charges) detail other miscellaneous charges not falling into any of the above categories.