HUD-1 Form

What Is a HUD-1?

A HUD-1 form, also called a HUD-1 Settlement Statement, is a standardized mortgage lending document. Creditors or their closing agents use this form to create an itemized list of all charges and credits to the buyer and to the seller in a consumer credit mortgage transaction. A HUD-1 form is most commonly used for reverse mortgages and mortgage refinance transactions.

As of October 3, 2015, the Closing Disclosure form replaced the HUD-1 form for most real estate transactions. However, if you applied for a mortgage on or before October 3, 2015, you received a HUD-1. In transactions that do not include a seller, such as a refinance loan, the settlement agent may use the shortened HUD-1A form.

Now, for most kinds of mortgage loans, borrowers receive a form called the Closing Disclosure instead of a HUD-1 form. Either form must be reviewed by the borrower before the closing, in order to prevent errors or any unplanned for expenses.

Understanding the HUD-1 Form

The HUD-1 lists all costs related to closing the transaction. Federal law requires the form to be used as a standard real estate settlement form in reverse mortgage and mortgage refinance transactions.

The law also requires that borrowers be given a copy of the HUD-1 at least one day prior to settlement, although figures can be added, corrected, or updated up to the time the parties are seated at the closing table.

Most buyers and sellers review the form with a real estate agent, attorney, or settlement agent. On the HUD-1 form, buyers are referred to as "borrowers" even if there is no loan involved.

Oddly, the HUD-1 is meant to be reviewed verso, or reverse side, first. The reverse side has two columns: The left-hand column itemizes the borrower's charges and the right-hand column itemizes the seller's charges.

The Closing Disclosure form is a new requirement for mortgage lenders as a result of banking reform legislation enacted in 2010, called the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The borrower's list includes charges related to the mortgage, such as a loan origination fee, discount points, payment for a credit report, and fees for the appraisal and flood certification. It also may include any prepaid interest charges, homeowner's insurance fees, property taxes, owner's and lender's title insurance, and the closing agent's fees.

The itemized seller list may itemize the real estate commission, any contractually agreed-upon credit to the buyer, and mortgage pay-off information. The seller's itemized charges typically are lower than the buyer's charges.

The figures on the HUD-1 verso (back page) are added up, and the totals are carried to the form's recto, or front side. The amount of cash required to be paid by the borrower and the amount to be paid to the seller appear at the bottom of the front page.

Special Considerations

Dodd-Frank Act Introduces the Closing Disclosure Form

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires lenders to provide borrowers of all types of mortgages (other than reverse mortgages and mortgage refinances) with a Closing Disclosure form.

Borrowers must be provided with the disclosure three days before closing. This five-page form includes finalized figures for all closing fees and costs to the borrower, as well as the loan terms, the projected monthly mortgage payments, and closing costs.

Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau or with the U.S. Department of Housing and Urban Development (HUD).

The three days are meant to allow the borrower to ask the lender questions and clear up any discrepancies or misunderstandings regarding costs before closing.