By Alex Yvonnou—By now, many of us are starting to see the new HUD-1 Settlement Statement for loans originating on or after January 1st, 2010. In order to provide borrowers with key documentation regarding their loan, the new HUD-1 includes information not previous provided on a Settlement Statement.
Also as part of the new rules updating the Real Estate Settlement Procedures Act (RESPA), A Good Faith Estimate (GFE) of charges must now be provided to qualified borrowers within three business days of the borrower’s application. These estimated fees are now reflected on the HUD as well, allowing borrowers to easily compare their final fees to the original proposal.
With the new HUD, each listed fee has an additional entry in parentheses that shows the borrower where that fee can be found on the GFE. More importantly, the new HUD also provides a side by side comparison of proposed fees and final fees, allowing the borrower to easily spot any differences. There are now rules governing how much a charge can change from the GFE to the final HUD. Some fees, such as origination fees, can not vary from the original proposal. Others, such as appraisals and title policy fees, can only increase up to 10% from the GFE.
The new HUD also has a section that discloses key loan terms. This includes:
- The loan amount
- The length of the loan
- The interest rate
- The principal and interest payment
- Whether or not the rate can change
- Whether or not the principal balance or payment can rise
- Whether or not there is a prepayment penalty or a balloon payment
- Whether or not an escrow is included
- Total payment including escrow
These are items that many notary signing agents review with the borrowers prior to signing the loan package, so now all this information is conveniently located on one document. Reviewing the information on the HUD before signing can help insure a smooth closing with no surprises. Borrowers can also request a copy of the HUD Settlement Statement 24 hours in advance, further alleviating any potential issues at closing.
A sample of the new HUD-1 Settlement Statement can be downloaded from the HUD website:
By Alex Yvonnou—