Saturday, April 3, 2010

New HUD-1 Rollout

The Department of Housing and Urban development has introduced the new format of the now very familiar "HUD-1" Settlement Statement and it is now in effect and being used by title companies across the country. The new format has expanded the statement to include a third page. On the new page realtors, buyers, sellers and closing agents will find a line by line comparison of closing cost estimates provided to the buyer by the loan officer in their "GFE," or Good Faith Estimate, with the actual closing cost shown on the settlement statement.
Initial feedback from settlement agents and realtors appears to be positive, however the long-term effects of the revised HUD-1 remain to be seen. Reactions that this title attorney has seen have been mixed. Borrowers are very happy to be able to see their GFE numbers in print directly across from the actual HUD-1 cost. It helps them to obtain an immediate understanding of any changes that may have occurred. Furthermore, the bottom half of page three summarizes all of the essential terms of their loan, including principal amount, interest rate, term, escrow settings and monthly payment. Closing agents are finding the new format to be very helpful tool to assist them in explaining the transaction and costs to the borrower.
On the other hand, pages one and two of the new HUD-1, which retain the same sections and line numbers as the old HUD-1, no longer break out fees by individual type of fee. Fees are now agglomerated by category and a total amount is listed in the fee column with the individual components listed in the center column or cross-referenced to page three. The feedback on these changes has not been positive since the changes make pages 1 and 2 more difficult to read and understand than had previously been the case.
Stay tuned for more tips and comments on the new HUD-1 as it becomes more ingrained in our industry and we become more comfortable and familiar with it.

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