HUD-1 CHANGES. HUD-1 form.

Transcription

1 2010 HUD-1 form

2 Highlights New HUD-1 (HUD-1 ver. 2010) is required on all RESPA regulated transactions (residential refinances, residential purchases) beginning 1/1/2010. New HUD-1 adds a new page (page 3) that summarizes all key loan terms. Some fees will now be lumped together, rather than itemized on new HUD-1. New HUD-1 puts pressure on lender and front-end escrow employees.

3 Purpose As part of lending reform in 2008, RESPA instituted guidelines that educates the buyers/borrowers more completely as to what the key terms of their loan are. The new HUD-1 form coincides with the new required Good Faith Estimate that lenders are required to issue to their customers. Very strict guidelines that regulate the GFE have also been instituted by RESPA.

4 If new GFE is utilized by lender, settlement agent must use new HUD-1. All lender fees must be shown on buyer s side of HUD-1, whether or not the buyer is paying for them. Lump sum credits from the seller will now be reflected on Page 1. FHA regulations for itemized credits on HUD-1 have been preempted by new RESPA regulations. Owner s title insurance policy is to appear on the buyer s side of the HUD-1. If the seller is paying for owner s policy, a lump sum credit on page 1 of HUD-1 will offset the buyer s charge. Section 700 will now have no reference to percentage of commission. Commission will be calculated based on a total commission to both agents, rather than 6%. Some lender fees will reflect on HUD-1 as a total of charges and will not be itemized. Most escrow/title fees will reflect on HUD-1 as a total of charges and will not be itemized. Page 3 is now a summary page/comparison of charges disclosed on the Good Faith Estimate.

5 Box B. Type of Loan FMHA (Farmers Home Administration Loan) has been removed as loan type. RHS (Rural Housing Service) loan replaces FMHA as loan type.

6 700 Series On the 2010 HUD-1, the commission amounts to Real Estate Brokers are now totaled without percentages, so buyers and sellers only see the total commission, not the percentage of the transaction that goes to the brokers.

7 800 Series Line 801 origination charge is now a total of fees including origination, processing fee, document prep fees, etc. that go to the lender for the loan. Fee appears inside the gray box as a summary. Line 802 will be for discount points and/or Yield Spread Premiums that will now be credited to borrowers to buy down interest rates. Fee appears inside the gray box as a summary. Line 803 is a total of 801 & 802. Fee appears in the totals column as a charge to the buyer. All charges in section 800 have a reference to where they appear on the Good Faith Estimate so borrowers can compare and verify charges.

8 900 & 1000 Series Impound deposits for escrow items (including aggregate adjustments) are itemized in gray box, totaled & summarized on line 1001 in buyers column. References where daily interest, Mortgage Insurance, Hazard Insurance & total impound deposits are located on Good Faith Estimate are added.

9 1100 Series Line 1101 will now be where the total of our escrow fee, lender s title insurance, endorsements, title binder, courier, FedEx, wire fees, e-recording fees, and any other title/escrow fees (not including recording fees) will be totaled. Most of our fees will no longer be separately itemized. Line 1102 will have, for the customer s information, what our escrow fee is. That total is in the gray box just for disclosure, it s already included in the total on line Line 1103 will be a charge to the buyer for the owner s title policy. If the seller is purchasing owner s policy on behalf of the new buyer, you must issue a debit/credit on the first page of the HUD-1 to offset the owner s policy charge. Line 1104 is for informational purposes only, to disclose the cost for the lender s policy that s already included in the total on line Lines 1105 & 1106 are the Lender s and Owner s title policy amounts, respectively. Lines 1107 & 1108 disclose the amounts of the title insurance premium that is retained within the agency and what is being sent to the underwriter. Lines 1101 & 1103 are disclosed to buyers on the Good Faith Estimate and those GFE locations are labeled in this section.

10 Aside from the GFE references for lines 1201 & 1203, section 1200 remains relatively unchanged. Although it s possible to itemize the e-recording fee on line 1206 separately, be aware that lenders may require you to lump those fees in with other title/escrow fees on line 1101.

11 Line 1301 is a summary of all shoppable charges, i.e. services authorized and selected by the borrower. You can still itemize survey charges in the 1300 series but your lender may request it to be moved to the title fees, line Surveys that are prepared specifically to issue survey coverage are supposed to be lumped into the title charges. Line 1400 is a total of all settlement charges. FYI: If you run out of room to itemize any charges on any section, the new HUD-1 continuation page will be on Page 4.

12 Page 3 begins with a comparison of what was disclosed on the GFE and what actually appeared on the HUD-1 as a charge. Some fees, like the Origination, Discount & Transfer Tax amounts cannot deviate from the Good Faith Estimate. Some can increase by 10% of the aggregate (total of all fees). Most of our fees are included in this second group: fees that can increase by only 10% from the original disclosure on the GFE. Since this 10% difference is in the total of all fees, it s actually relatively easy to stay within the acceptable range (tolerance range).

13 The next summary is charges that are fluid and allowed to change. The amounts deposited into impound accounts and paid upfront for daily interest vary depending on when the closing takes place. Also, the hazard insurance amount can change prior to closing. RESPA allows all these costs, plus any cost for a service the borrower selected (section 1300) to change by any amount from the GFE to the HUD-1.

14 Loan Terms... Also part of the 2010 HUD-1: Loan Terms. This section discloses the loan amount, initial interest rate, PITI, info on adjustable rates, negative amortization, prepayment penalties, balloon payments, etc. Although it s nothing we re used to disclosing on our forms, RESPA is requiring all lenders to break this information down to us in a concise, easy to read and understand way so we can simply plug the info into our computer system.

15 Q & A Aren t we required per FHA guidelines to itemize any seller paid buyer s closing costs and run a tape? Not anymore! RESPAs rules preempt FHAs guidelines for BCC credits. Simply place a bulk credit/debit on page 1 of the HUD-1 and you re done. I heard we have to recite a script or something to buyers to go over their loan terms at the closing table. Is this true? Actually it was originally part of the RESPA regulation, but with the HUD-1 Page 3 Loan Terms disclosure, we no longer have to recite a closing script. What if our recording fees change because of a rider or an endorsement is now being required that we didn t originally disclose on the GFE? Can we change our fees? As long as the total of our fees, when changed, doesn t exceed a 10% difference from the original GFE disclosure, we should be okay. I have a lender that is requiring me to disclose exact fees without even having a commitment. Do I have to disclose our exact fees this quickly? Yes. Lenders now have only 72 hours from the time they receive a loan application before they are required to prepare a Good Faith Estimate. And that GFE should have amounts that are as close to the final figures as possible since the tolerance levels have changed so dramatically.

16 Q & A What happens if our fees change and it is more than a 10% difference of all the combined fees? You must re-disclose the corrected amounts to the lender who will need to re-draft a new GFE. What if there is a tolerance violation discovered after closing and our fees on the HUD-1 changed in excess of 10%? Who s responsible? RESPA requires the lender to take responsibility for any tolerance violation and also requires the lender to correct the violation within 30 days. Has the policy for itemizing P.O.C. items changed? Yes. P.O.C. items will still be itemized outside of the buyer s column but RESPA requires the P.O.C. ed item to have a label referring to who paid for it: i.e, P.O.C.-Borrower, P.O.C.-Seller, P.O.C.-Lender Do I have to use this new HUD-1? Before 1/1/2010, if your lender requires it or is using the new GFE, then yes, you are required to use the new HUD-1 form. After 1/1/2010 the new HUD-1 is required for all RESPA-regulated transactions What do we disclose as the price for a lender s policy? Since we will probably not know when the previous MP was issued or the amount of the payoff (to be able to calculate the re-issue rate, simply disclose the Mortgage Rate, 90% of the Owner s Policy Rate.

17 Q & A I m closing a commercial transaction or a cash transaction, do I have to use this new HUD-1? No. Cash and commercial transactions are not regulated by RESPA, therefore you can use a settlement statement instead. If I have a simultaneous first and second set of loans to close, can I use one HUD-1? No. RESPA requires separate GFEs and HUD-1s to be used for each mortgage. How do I disclose Yield Spread Premiums on the new HUD-1? Yield Spread Premiums are to be disclosed on line 802. You cannot use P.O.C.s with Yield Spread Premiums anymore. Where do I itemize E-Recording charges? E-Recording fees are considered title services and are to be added to the total amount in line For even more Q & As, go to:

18 Affect On Closings... If any origination or discount fee changes at all from original disclosure on GFE, the entire set of loan documents may have to be redrawn. If the total of other fees (including title and escrow fees) increase by more than 10%, the entire set of loan documents may again have to be redrawn. Some lenders will require borrower receipt of HUD-1 at least 24 hours prior to COE (already a RESPA regulation although rarely enforced). Front end escrow personnel will be under more pressure to disclose correct fees to the lender. Borrowers/buyers will be paying closer attention to the HUD-1 at closing, specifically how it compares with the Good Faith Estimate they were provided.

19 New HUD-1 Pages 1-2

20 New HUD-1 Page 3

21 New GFE Pages 1-2

22 New GFE Page 3