Housing and Urban Development Form 1 (HUD-1)

I have mentioned this form several times in the past as the only form in the entire mortgage process which is actually required to be accurate. Whoever your provider is, this is the one form they cannot play games with. This article is goes over the form line by line, referencing previous entries.



The top section has to do with identifying information on your transaction. Your name, the name of the other party to the transaction, escrow numbers, name and address of lender, date of settlement.



The meat starts with line 100, the Summary of Borrower's Transaction, and line 100 the section on Gross amount due from borrower.



101 Contract Sales Price: Should be the same as on your purchase contract.



102. Personal property: Say you agree to pay $500 extra if they leave the sofa. Here's where that goes.



103. Settlement charges to borrower (line 1400) adds the costs of the transaction to the total.



106 and 107 are repayments for any taxes the seller may already have paid as of the date of settlement, but are not their responsibility as the time period covered includes some time after the effective date of sale.



120. Adds all the lines up to this together. The rest are simply blank lines that may or may not be a factor in your particular transaction. If they are a factor, it should be because you specifically agreed to pay them!



The 200 section is about stuff that is paid for, or on behalf of the borrower, or you have simply already paid.



201. Deposit or earnest money: The deposit you made, either with escrow (purchase) or the bank (on a refinance) to persuade them that this was a good transaction.



202. Principal amount of new loan(s): Check and make sure this matches your new Note. In some states, they may be able to combine the amounts of two loans here, but they shouldn't.



203. Existing loans taken subject to: If you're assuming a loan or something similar, it goes here.



204. Second mortgage loan: Compare against your new second mortgage amount.



205 and 206 are blank lines for things that may not be a factor in every transaction.



210 and 211 are for city and county taxes that have not yet been paid by the seller, but the cost has been incurred. Let's say today is September 1, and we're in California, where the property taxes run July 1 to June 30. On September 1, the seller owes two months of property taxes, but those taxes haven't been paid, and won't be due until November 1. So there will be a credit here from the seller to the buyer for two months of property taxes, which the seller is responsible for until the effective date of sale, but the buyer will have to pay on November 1. 212 to 219 are blank lines unless something special is relevant to your transaction.



220 is total paid by/for borrower: This is a total of everything paid by you or on your behalf.



300 Section tells if you are due money at settlement or have to come up with some. 301 is transferred from line 120, 302 from line 220. If 302 is larger, you get cash back. If 301 is larger, you have to provide the check in otder to close.



The second column is a summary of the seller's transaction, if there is a seller and it's not just a refinance.



Section 400 is about what's due to the seller, starting with 401 Contract Sales Price, then 402 which is a mirror or 102, then 403, Impound Credit, which is rarely used, as it is pretty much applicable to loans being assumed.



406 and 407 are mirrors for 106 and 107, as are 408 to 418 mirrors of the 108 to 118 section. 420, Gross amount due to seller, is a summation of all of these.



The 500 section has to do with stuff the seller is paying other people.



501 is excess deposit, 502 is settlement charges to seller, 503 is loans that are bing assumed.



504 and 505 are mortgage payoffs being made, 507 through 509 are blank spaces for things not applicable to every transaction.



510 and 511 are mirrors of 210 and 211, as 512 through 519 mirror 212 through 219, blank lines not applicable to every transaction.



Section 600 is analogous to but not mirroring section 300. Line 601 is line 420 brought down. Line 602 is line 520 brought down. The difference is line 603 cash to seller (This can be line 603 cash from seller in the case of a so-called "short sale")



All of this is good and necessary information, but The Really Good Stuff™ is all on page 2. The lines at the right list who is paying it (buyer or seller)



Section 700: division of commission



Line 701 is compensation to the listing broker, line 702 is to the selling broker (i.e. the buyer's broker, the people who "sold" the property), and line 703 total commission paid at settlement. I've never seen this paid by buyer, it's always been paid by seller.



Section 800 is items payable in connection with the loan itself. This doesn't mean that these are all the loan-related charges - far from it.



Line 801 and 802 are dollar amounts of points. If these aren't zero, divide them by the loan amount to make certain they are the numbers agreed upon.



Lines 800 through 1317 are linked on a 1:1 basis with the appropriate lines on the Good Faith Estimate (Mortgage Loan Disclosure Statement in California) (see articles on Good Faith Estimate linked below for explanations) In an ideal world, the total of these should be exactly what was indicated on the Good Faith Estimate/Mortgage Loan Disclosure. There are some few items that are not under the loan officer's control (again, see Good Faith Estimate for which are and are not). A good rule is that if it isn't on the Good Faith Estimate/Mortgage Loan Disclosure in one form or another, it shouldn't be here. Compare it to the Good Faith Estimate/Mortgage Loan Disclosure to find discrepancies. Other than things like prepaid interest, which the loan officer does not control but should have a pretty accurate estimate of, the most difference there should be between the two documents is one big fee gets broken down into little fees. But if you're told, for example, that the $795 amalgamation of lenders fees was broken up into A, B, and C, make sure that A+B+C=$795, and do not allow additional fees to be lumped in. Grab a piece of scrap paper and take notes. Make certain these numbers jibe. It is easy to hide thousands of dollars in unsuspecting fees to clients in this page if you, the client, are not careful.



Line 1400 is a summation of these lines.



Once again, look hard at the numbers on these two pieces of paper. It is the only honest accounting many people get of the transaction, and the fact that it comes at the end of the transaction makes hiding all kinds of things easy. You, the client, are tired of the whole process and want it to be over, a fact which many loan officers and loan providers rely upon. Put your guard up for a few more minutes, long enough to be certain what you sign for here matches what you signed up for back at the start of the process.



Caveat Emptor.



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