What is a HUD-1 Settlement Statement?
Update on the RESPA Reform
Effect January 1, 2010, lenders and title agencies must use the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement as defined in the new Real Estate Settlement Procedures Act (RESPA). In order to ensure your transactions go smoothly, Stewart Title is ready to use the new HUD-1 Settlement Statement starting now.
The HUD-1 statement is a form used by the settlement agent to itemize all charges that must be paid in connection with the real estate transaction. It gives each party a complete list of their incoming and outgoing funds.
The HUD-1 form:
- Is mandated by the federal government for residential loan transactions
- Is a written account of the financial aspects of the escrow transaction
- Is prepared prior to the close of escrow
- Includes all charges and credits to you
- Reflects the following:
- Purchase price
- Funds deposited or credited on your behalf
- Payoff on existing encumbrances or liens
- Charges for all services
- Net proceeds (a final determination of the amount the seller is entitled to received at the close of the escrow)
- Required funds the buyer must bring in to close the transaction (see Good Funds for more information)
The settlement agent should provide this document for your review prior to your scheduled transaction, but keep in mind that the settlement agent will not be able to complete the HUD-1 until the new lender has sent the final loan package. If the new lender has not sent final instructions itemizing their fees, the HUD-1 will be incomplete prior to your scheduled settlement.
It is important that you review the settlement statement carefully. It is the final statement of the finances of your transaction. If you do not understand something, be sure to ask the Closing Officer for an explanation or consult your attorney for clarification related to legal matters.