Say good-bye to the HUD-1 Settlement Statement

Title Insurance with Federal Title & Escrow Company

The Consumer Financial Protection Bureau (CFPB), by mandate under Dodd-Frank, will soon change our world once again. 

Just barely two years since the title and mortgage industry was turned upside-down with regulatory changes to the Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedure Act (RESPA), the CFPB will be releasing its proposed forms and regulations next month to replace the HUD-1 Settlement Statement, Good Faith Estimate, and Truth-in-Lending Disclosure. 

These new forms will be known as the Loan Estimate and Settlement Disclosure Form.

On its snazzy website, CFPB states that the current 3-page HUD-1 settlement statement is replete with "... Technical and legal jargon ... that may be more confusing than helpful. Complicated and lengthy disclosures can make it hard to answer or even ask the right questions."

So CFPB’s solution is to do away with the current 3-page HUD-1 and replace it with a lengthier and more complicated 5-page document called the Settlement Disclosure Form

This is hardly an improvement. In our experience at the closing table, homebuyers are less likely to review lengthier disclosure forms compared to short form disclosures.

Among other things, these new CFPB forms will require lenders and settlement service providers to overhaul their existing software production systems, re-tool the lender-to-title company interfacing, and re-train staff members — which meanshomebuyers will end up paying more at settlement

Currently, homebuyers pay, on average, $750 for total settlement fees in the Washington DC metro area. With little, if any, benefit to the consumer, I expect that figure to increase to approximately $1,000 with the implementation of these new CFPB forms and regulations.

The current disclosures are more than adequate. At the risk of sounding astringent, if a homebuyer can’t understand the HUD-1 Settlement Statement in its current form, then perhaps that homebuyer shouldn’t be a homebuyer.

Update (07/02/2012):

For those who like the new Settlement Disclosure Form, I'd like to know if you think it's worth an increase of about 30% in settlement fees to your homebuyers.  

Secondly, do you think the last round of changes 2 years ago to the GFE, TIL, and GFE improved your homebuyers' experience?

Lastly, all of these regulatory requirements and changes create higher barriers to entry for competition (i.e., increase in start-up costs).  Over time, established title companies will increase charges to the consumer when faced with less competition.  



Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Herman Herrera 06/29/2012 11:57 PM
  2. Nick T Pappas 06/30/2012 04:05 AM
  3. Allen Lomax 07/01/2012 04:35 AM
  4. Gabe Sanders 07/01/2012 08:24 PM
  5. Lenn Harley 07/01/2012 08:36 PM
Real Estate Best Practices
District of Columbia District of Columbia
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Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

I can just see some short sale bank kicking back the new forms because they don't like them

Jun 30, 2012 11:21 AM #89
Eric Michael
Remerica Integrity, Realtors®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

Todd, will there ever be an end to this? Each time they make new forms, they end up not being good enough. Government, eh?

Jun 30, 2012 12:12 PM #90
Cyndi Carver
Northwest Real Estate - Bellevue, WA
Issaquah & Bellevue Specialist

Thank you so much for the update! It gets more complicated all the time. I remember when the TIL was first required, we had to read the explanation to the consumer and they still didn't understand the whole thing.

Jun 30, 2012 12:14 PM #91
Cheryl Dukes . . . . . Intown Atlanta
Solid Source Realty, Inc. - Atlanta, GA

Wow - only $750 in total settlement fees? - Sounds like a bargain for the D.C. area. I have to disagree that if a buyer doesn't understand the form, then the buyer shouldn't be buying a house. (what does understanding the hud 1 have to do with being a deserving homeowner?) Half the time, I don't understand the form my own self. I don't think it's easy to understand at all. Instead of making it longer and more complicated, it should come with a detailed explanation of each line item. Perhaps buyers would be more likely to review it, if it was more user-friendly.

Jun 30, 2012 12:28 PM #92
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

It shouldn't deter us from doing our business since we are continually evolving and increasing our costs of doing business as we attempt to create more efficacy with our business partners, city, county, state and federal governments. 

Jun 30, 2012 12:40 PM #93
Paddy Deighan JD PhD - Vail, CO
Paddy Deighan J.D. Ph.D

what else can we expect?? The current HUD-1 only makes sense when you read page two before page 1!!

Jun 30, 2012 01:02 PM #94
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

The HUD 1 can be very confusing.  Making it longer is not going to help.  The more paper the less people actually understand.  

Jun 30, 2012 01:29 PM #95
Woody Edwards
First Choice Realty, Inc - Chesterfield, VA
A Realtor® Who Answers His Phone!

Many of you are exactly right.....the longer the form, the less likely it will be read, let alone understood.  Typical government, trying to "HELP" the consumer.......and screwing it up!

Jun 30, 2012 03:00 PM #96
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Todd, thanks for the post and the heads up.  We did not know there was another JUD coming.

Jun 30, 2012 11:01 PM #97
Zia Montesi BIC & Realtor
As BIC and with 12 years experience I still think it's my responsibility to explain to my Buyer or Seller what they are being asked to sign. I reread each time which allows me the review & be prepared to answer questions. Clarification is a must; I agree with Paddy, go over Pg 2 first in your "education" of your vital client, you're a partner in this transaction. Educate and protect. Zz / /OUTER BANKS BEACHES / NE NC
Jul 01, 2012 12:45 AM #98
Jonathan Osman
Jonathan and Associates, Inc - Charlotte, NC
Charlotte House Hunter Group

So they've taken a relatively easy document to explain and made it about as complicated as possible.  I bet this document cost about a billion dollars to create as well.  If the government can do such great work with this HUD-1, I can't wait to see what they come up with for health care (tougue firmly in cheek).

Jul 01, 2012 01:48 AM #99
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

Kind of cranky don't you think towards the home buyer? I say the consumer does not need any more interference & over- complication from these people. All their actions have cost buyers $$.

Jul 01, 2012 02:07 AM #100
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

Why fix something that's not broken? I think it's in the best interest of the consumer to leave well-enough alone.

Jul 02, 2012 03:15 AM #101
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA


Got to set some time aside to thoroughly review the new form.  I thought the HUD-1 was good.  My only hope is that the new form will be easily understood by a buyer.  From you blog it sounds like that is not the case.

Jul 02, 2012 05:51 AM #102
Donna Quinlan
Keller Williams Realty - Newburyport, MA
Keller Williams Real Estate Agent Career Consultan

That's too bad. My clients usually understand the Hud quite well. I'm not looking forward to this change. Thanks for the information. I had not heard about the change.

Jul 03, 2012 09:10 AM #103
Thom Abbott |770.713.1505 | Intown Atlanta GA Condo Living - Atlanta, GA
Midtown Atlanta GA Condos For Sale

I have two words....."heavy sigh!"

Let's see...I looked a tthe Hemlock one and it just seems like a heck of a lot of paper to say the same thing.

I love how we (the government) like to see just how difficult we can make something.


Jul 04, 2012 07:04 AM #104
Jeremy Joslin
Coldwell Banker Residential Brokerage - South Windsor, CT
Professional Real Estate Marketing and Sales

Very interesting Todd.  Sometimes I wonder what the thought process is.  

Jul 05, 2012 12:29 PM #105
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

The original statements worked for me!

Aug 14, 2012 05:50 PM #106
Liane Thomas -Top Listing Agent
BROKER Allison James Estates & Homes BRE 01885684 - Corona, CA
Bringing you Home!

I don't see anything in a new 5 page form that benefits my buyers. Settlement costs going up by 1/3? Not a benefit...more wasted paper?...not a benefit...

Nov 02, 2012 06:18 AM #107

I think it would be better if they just do everything electronically of they want to add more pages, defintiely a waste of paper and not environment-friendly, plus the consumers will find it harder to understand the terms of this agreement. I suggest trying this website I discovered where forms can be filled out online and send them their way to recipients paperless!

Sep 19, 2014 07:47 AM #108
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