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To view a blank HUD I form, simply click on the link below:
http://www.hudclips.org/sub_nonhud/html/pdfforms/1.pdf
UNDERSTANDING A SETTLEMENT STATEMENT
A HUD I Settlement Statement is a "financial history" of a transaction. It is a detailed explanation of both the Sellers' and Buyers' sides of a real estate transaction.
The format of a Settlement Statement has been established by the US Dept. of Housing and Urban Development (hence the name "HUD I"). While the overall look can differ from one Escrow Company or lender to another, the content is actually quite uniform.
Page 1. Sections A through I
This is the section of the HUD I that details the type of transaction, the parties to the transaction, the property involved, the settlement agent and the settlement and proration dates. It should state in the box at the upper left if this is an "estimated" or "final" statement. Also, as a general rule, both the settlement date and the proration date should be the same; they should be the actual date of closing/recording.
Page 1. Sections J and K
Section J is the summary of the Buyer's side of the transaction, while Section K is the summary of the Seller's side.
Lines 101 and 401: This is the contract sales price and they must be identical.
Lines 102 and 402: If personal property is transferring in the transaction and has a monetary value (which is generally not the norm), it would be shown here. These 2 lines must match.
Line 103: The Buyer's settlement charges as totaled in line 1400 of page 2 are transferred to this line.
Lines 104 and 105: Any additional charges being assessed to the Borrower are included here.
Lines 403 thru 405: Any additional 'income' due to the Seller is detailed here.
Lines 106 thru 112 and Lines 406 thru 412: If the Seller has prepaid any items such as real estate taxes, homeowners association assessments or dues, etc., that cover any period of time after closing, then the Buyer needs to reimburse the Seller. For example, if the Seller has paid the homeowners association dues until December 31, but the closing occurs on June 30, then the Buyer must reimburse the Seller for the six months of prepaid dues.
Line 120: This represents the total due from the Buyer, and includes the purchase price of the property, any personal property being purchased at an additional price, all loan, title and escrow settlement costs, and any reimbursements due to the Seller for his prepaid items. This is the Buyer's gross cash requirement.
Line 420: This represents the total due to the Seller, and includes the purchase price of the property, any personal property being sold at an additional price, and any reimbursements due from the Buyer for prepaid items. This is the Seller's gross amount due.
Line 201: This represents the Buyer's earnest money deposit, and should reflect only the initial cash deposit made when the escrow was opened.
Line 202: This line represents the amount of the Buyer's new loan.
Line 203: If the Buyer is assuming the Seller's loan, the balance being assumed is shown here.
Line 204: This line represents the additional total cash requirement from the Buyer, after all loan fees, etc. are calculated.
Lines 205 thru 209: These lines are available as needed to show credits for amounts paid by or on behalf of the Buyer.
Line 501: If the Seller is required to come into the transaction with cash, this is where his deposit would be shown.
Line 502: The Seller's total settlement charges, including realtor's commission, is transferred from Line 1400 (on Page 2) to this line.
Line 503: lf the Buyer is assuming the Seller's loan, the balance being assumed is shown here.
Line 504: The total funds required to payoff the Seller's first mortgage are shown here.
Line 505: The total funds required to pay off the Seller's second mortgage are shown here.
Lines 506 thru 509: These lines are available as needed to show any additional charges/reductions in the amount due to the Seller.
Lines 210 thru 220: These lines are available to show adjustments for items and unpaid by the Seller. Specifically, this would be for the Lines 510 thru 520: current year's unpaid taxes and the current month's unpaid homeowner's association dues. Pro-rations are always based upon the latest available actual billing. For example, if the property was last taxed as a vacant lot, but now has been sold with a home on it, the tax pro-ration will still be based upon the vacant lot. Unfortunately for the Buyer, if the County subsequently taxes the property as a completed home, the Buyer's property taxes will increase substantially, while the tax proration did not.
Line 301: The total from Line 120 transfers here.
Line 302: The total from Line 220 transfers here.
Line 303: This is the net difference between Lines 301 and 302. Prior to closing, when this document is a Pre-Audit, this amount will be the total due from the Buyer to complete the closing. When closing has occurred and this form is a Final settlement statement, this line either reflects -0-, which means that the Buyer has paid into escrow all funds required to close, or if an amount is shown here, it is most likely a refund due the Buyer because they over-deposited funds into escrow.
Line 601: The total from Line 420 transfers here.
Line 602: The total from Line 520 transfers here.
Line 603: This is the net difference between Lines 601 and 602. This is the Seller's net proceeds from the sale.
Pa2e 2. Section L
Section L is the breakdown of both the Buyer's and Seller's settlement charges. It includes real estate commissions, all loan fees and reserves, all title/escrow charges, and any or additional charges/expenses paid through escrow, such as pest inspection billings, repair billings, etc.
Lines 701 thru 704: This section details the total real estate commissions paid through the escrow. If referral fees are being paid to another Realtor, it can be detailed here at the request of the paying Realtor.
Lines 801 thru 813: This section details the lender's loan fees. If necessary, additional lines can be added. Any time a fee is designated as "POC", that means it has been "Paid Outside of Closing" and the amount is not included in the total.
Lines 901 thru 905: These are the charges that the lender requires be paid in advance, or at closing. These include prepaid interest, insurance premiums, etc.
When calculating prepaid interest, remember that interest in a monthly payment is paid in arrears. In other words, when you make your May loan payment, you are paying your April mortgage interest. So, if you are closing on this purchase in March, you must prepay the interest from the date of closing to April I. Conversely, if you are closing on April 2 and the first payment will be due on the loan on May I, you will receive an interest credit for the one day in April (which in this case is April 1), when you did not use the loan funds. That allows the lender to simplify their accounting process by giving the credit and then charging the entire May payment. Lenders prefer that the first year's insurance premiums, and flood insurance if required, be paid through escrow. The Buyers need to be prepared to include those sums in their closing costs, but the actual payment will be made by the title company.
Lines 1001 thru 1009: These are the sums required by the lender to be deposited into the Buyer's impound/escrow account. These calculations are determined by the lender, and are subject to change on the actual closing date.
Lines 1101 thru 1118: These are the title and escrow fees assessed by the title company. All charges are based on the schedule of fees posted with the Director of Insurance of the State of Arizona. Unless otherwise specified in the Purchase Contract, the settlement fee in Line 1101 is split equally between Buyer and Seller. This fee is based upon the purchase price in the transaction; if the Buyer is obtaining a new loan, add $50 to the escrow fee on the rate chart.
Lines 1102 thru 1107 are fees that are not generally charged in this community.
Lines 1108, 1109, 1110 are the title insurance fees. The lender's coverage shown on Line 1109 is based upon the amount of the new loan obtained by the Buyer. On the fee chart, you will use the column marked "Comb. Extended Loan Policy". Line 1110 is for the Owner's Coverage, and this fee is paid by the Seller. On the rate chart, you will use either the AL T A Homeowners Policy or the Standard Owner's Policy columns.
Line 1111 is for the endorsements that the lender requests the title company to add onto the title insurance policy. Depending on the particular endorsement, the charges range from $50 to $200 per endorsement.
Line 1112 is for the Trustee Sale Guaranty fee, and is not used in a purchase transaction.
Line 1113 is for express mail charges as incurred by the title company. This will include fees for over-nighting loan payoffs for the Seller or returning loan documents to the Buyer's lender. This fee is $15 per overnight package.
Line 1114 is for messenger fees. This is rarely charged in our community.
Line 1115 is a tracking fee. Whenever a Seller's loan is paid off, the title company charges $50 for the first loan, and $25 for every loan thereafter, to monitor the payoff lender to assure that the proper release documents are submitted for recording.
Line 1116 is for status reports and is not used in a purchase transaction.
Lines 1117 and 1118 are for miscellaneous fees as required to complete a transaction. An example of these fees would be to pay for status reports from the Kachina Village Improvement District.
Lines 1200 thru 1206: This section details the recording fees associated with the transfer of property.
Line 1201 is for recording fees, which are split between Buyer and Seller. Typically, the Buyer pays to record the Deed into his name and his new Deed of Trust document. The Seller pays for recording of any releases of his loans.
Lines 1202 thru 1204 are not used in this community.
Line 1205 is the fee for recording the Affidavit of Property Value. This is a Seller charge.
Line 1206 is for miscellaneous recording fees as necessary
Line 1301: If a Surveyor any staking has taken place on the property and the bill is to be paid through escrow, this is where it would be charged.
Line 1302: The termite inspection fee is assessed on this line. According to the new contracts, this is a Buyer fee unless the Seller's box on the contract has been specifically checked.
Lines 1303 thru 1305: Any additional costs paid through escrow, including but not limited to payment of taxes, home warranty premiums, any repair billings, etc., are charged here.
The totals from lines 700 through 1305 are placed on Line 1400. These total: then transfer to Page 1 of the Settlement Statement, either on Lines 103 or 502 as appropriate.
Please remember that a pre-audit is exactly that, a preliminary estimate of the financial breakdown of the transaction, and the numbers are subject to change up until the time of closing. If you are aware that there are any repair bills that need to be presented for payment through escrow, please be sure to advise your escrow officer as soon as possible. (After escrow has closed, there are no available funds for payment of additional repair bills.) Once escrow has all the loan payoffs, bills, etc., that are to be charged to the Seller, it is possible to prepare a Seller's pre-audit prior to close. However, until the Lender's Instructions (which are sent with the loan documents) are received, escrow cannot prepare a Buyer's pre-audit.
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