RESPA Lawyer Blog
HUD released the following information today with regards to the HUD-1 Settlement Statement in order to help consumers and industry better understand the new RESPA rules that will go into effect on Jan. 1, 2010. We will list below all FAQ’s HUD released with regards to the HUD-1 Settlement Statement.
If you have questions or comments please feel free to ask in our RESPA Blog comment section.
The following general questions and answers with respect to the HUD-1 Settlement Statement are answered by HUD below:
Question 1:
How are courier and overnight delivery fees shown on the HUD-1 Settlement Statement?
Answer:
Courier and overnight delivery fees are considered to be fees for administrative or processing serves. They are part of a primary service, such as the origination service or title service, and may not be separately itemized.
Question 2:
Does voluntarily using the HUD-1 in a real estate transaction that otherwise is not subject to RESPA result in RESPA applying to the transaction?
Answer:
No, using the HUD-1 form does not subject a transaction to coverage under RESPA.
Question 3:
Does “conducting a settlement” (from the definition of “title service”) have the same meaning as “conducting the closing”?
Answer:
Yes. The terms “conducting a settlement” and “conducting the closing” have the same meaning under HUD’s RESPA regulations and are subject to identical requirements under the regulations.
SELLER-PAID ITEMS ON THE HUD-1 SETTLEMENT STATEMENT
Question:
What if at the closing the seller is paying for a settlement service that was listed on the Good Faith Estimate (GFE), such as the Owner’s title insurance policy? How is this shown on the HUD-1?
Answer:
If the seller is paying for a service that was on the Good Faith Estimate (GFE), such as Owner’s title insurance, the charge remains in the borrower’s column on the HUD-1. A credit from the seller to the borrower to offset the charge should be listed on the first page of the HUD-1 in Lines 204-209 and Lines 506-509 respectively.
REAL ESTATE COMMISSION QUESTION IN 700 SERIES OF HUD-1
Question:
Where do I put the percentage of commission to the real estate agents on the HUD-1?
Answer:
The percentage used to compute the sales commission has been removed from the HUD-1 to better reflect current practices in the real estate industry. The total amount of the commission to each real estate broker or agent must be shown on Lines 701-702. The amount of the commission disbursed at settlement must be shown inside the columns on Line 703.
LOAN QUESTIONS IN 800 SERIES OF HUD-1
Question:
What charges are included in “Our origination charge” on Line 801 of the HUD-1?
Answer:
Line 801 includes all charges received by a loan originator, except for any additional charge (“points”) for the interest rate chosen on the loan. The amount on Line 801 also includes all amounts received for any service, including administrative and processing services, performed by or on behalf of the lender or any mortgage broker. (The amount on Line 801 is not listed in the columns.)
Question:
If an attorney prepares loan documents for a lender, where does that charge go on the HUD-1?
Answer:
Loan document preparation fees are included in the charge on Line 801 of the HUD-1. If a third-party provider, such as an attorney, is compensated for document preparation, the payment to the third party must be itemized on a blank line in the 800 series with the amount listed outside of the column.
Question:
How does a settlement agent show a “no cost” loan on the HUD-1?
Answer:
In the case of the “no cost” loans where “no cost” refers only to the loan originator’s fees, a credit equal to the amount in Line 801 on the HUD-1 must be given in Line 802 of the HUD-1 so that the adjusted origination charge in Line 803 of the HUD-1 equals zero. In the case of “no cost” loans where “no cost” encompasses some or all third party fees and the origination charge, a credit should be listed in Line 802 of the HUD-1 to offset all fees encompassed in the “no cost” loan, resulting in a negative number for the adjusted origination charge on Line 803 of the HUD-1. The third party services covered by this offset must be itemized and listed in the borrower’s column.
INSURANCE QUESTIONS IN 900 SERIES OF HUD-1
Question:
Where is the charge for flood insurance shown on the HUD-1? What if the borrower pays it prior to settlement?
Answer:
Flood insurance should be disclosed on Line 904 of the HUD-1 with the charge in the borrower’s column. If the borrower pays the insurance prior to closing, the item should be shown on Line 904 of the HUD-1 noted as “Paid Outside of Closing” or “POC” with the charge to the left of the column.
ESCROW QUESTION IN 1000 SERIES OF HUD-1
Question:
Does Line 1001 reflect the total of all other lines in the 1000 series?
Answer:
Yes, Line 1001 is the total of all escrow items contained in the 1000 series of the HUD-1.
TITLE QUESTIONS IN 1100 SERIES OF HUD-1
Question:
What are title services?
Answer:
The term “title services” includes:
1. Any service involved in the provision of title insurance, including but not limited to:
a. title examination and evaluation b. preparation and issuance of title commitment c. clearance of underwriting objections d. preparation and issuance of policies e. all processing and administrative services required to perform these functions (ex. document delivery, preparation and copying, wiring, endorsements, and notary);
AND 2. The service of conducting a settlement.
Question:
Where should the settlement agent list the commitment fee, wire fee and other miscellaneous title fees on the HUD-1?
Answer:
The commitment fee, wire fee, and other miscellaneous fees are included as processing and administrative fees that are part of the definition of “title services.” All of these types of fees must be included in charges shown on Line 1101 of the HUD-1, and are not to be itemized separately.
Question:
Are document preparation fees included in “title services” or would they appear as separate line item charge in the borrower’s column?
Answer:
Document preparation fees are part of administrative and processing fees which are included in the charge in Line 1101 of the HUD-1 and may not be separately itemized.
Question:
Are delivery fees included in “title services” and therefore included in Line 1101 of the HUD-1?
Answer:
Yes, delivery fees are included in the definition of “title services” and are included in the charge shown in Line 1101 of the HUD-1.
Question:
Are notary fees included in “title services” and therefore included in Line 1101 of the HUD-1?
Answer:
Yes, notary fees are included in the definition of “title services” and are included in the charge shown in Line 1101 of the HUD-1.
Question:
What is the Lender’s title policy limit on Line 1105 of the HUD-1?
Answer:
The Lender’s title policy limit, Line 1105 of the HUD-1, is the maximum dollar amount of coverage available under the policy.
Question:
Where should the quote for the Lender’s title insurance policy premium be disclosed on the HUD-1?
Answer:
The Lender’s title insurance premium is part of the charge shown on Line 1101, “Title services and lender’s title insurance’ on the HUD-1, along with any fees for title searches, examinations, endorsements and all charges associated with the title services and settlement (closing) agent services.
Question:
Do the disclosures of the title agent’s and the title underwriter’s portions of the title insurance premium on Lines 1107 and 1108 of the HUD-1 Settlement Statement also contain the charges for the title policy endorsements?
Answer:
Yes, disclosure of the agent’s and the underwriter’s portion of the title insurance premium on Lines 1107 and 1108 of the HUD-1 Settlement Statement also contains any charges for title policy endorsements that are retained by the title agent or title underwriter.
Question:
If a title insurance underwriter is also the title agent, what should be shown on the Lines 1107 and 1108 of the HUD-1?
Answer:
If there is no premium split between the title underwriter and a separate title agent, all of the title insurance premium (including charges for endorsements) would be shown on Line 1108, and $0.00 would be shown on Line 1107.
GOVERNMENT FEES QUESTION IN 1200 SERIES OF HUD-1
Question:
If there are additional government recording fees, such as to record a power of attorney or road maintenance agreement, are they included in Line 1201 of the HUD-1 or can they be charged separately?
Answer:
Line 1201 is used to record the total government recording charges. Additional items the lender requires to be recorded, other than those already enumerated in Line 1202 must be itemized on Line 1206. The charges for these additional items must be stated outside the column.
HUD-1 PAGE THREE QUESTIONS
Question:
How do settlement agents get the information to prepare page 3 of the HUD-1? Do they have to search through all of the loan documents to get this information?
Answer:
The lender is required to transmit the information necessary to complete the HUD-1. The instructions for completing the HUD-1 state that the lender must provide information to the settlement agent in a format that permits the settlement agent to simply enter the necessary information to complete the loan terms section on page 3 of the HUD-1 without having to refer to the loan documents.
Question:
Is it a violation of the tolerance if some of the items in the 10% category in the Comparison Chart exceed 10%, but other items in the category do not exceed 10%?
Answer:
The tolerance applies to the total of all charges shown in the category “Charges That in Total Cannot Increase More Than 10%.” A tolerance violation of this category means that the total of all actual charges in this category exceed the total of all estimated charges in this category by more than 10%.