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New HUD Forms...the Top change in the Mortgage Industry for 2013


Recently I attended a symposium at the Federal Reserve in Boston.  The focus was a forecast of economic trends in 2013, and how these will affect the real estate industry.  I am writing a series of blogs from the information shared by the panel of speakers.


#1: New HUD Forms at real estate closings:

Among the 400 new rules imposed by the Dodd-Frank Act, are mandated changes to the HUD document signed by buyers and sellers at closing.

The old HUD was a 2-page (legal sized) document.  It was deemed too difficult for consumers to understand.

The new HUD-1"simplifed" form is 5-pages long.

Retraining and reprinting to accommodate the new form has a cost, and you can be assured these costs will be  passed on to consumers in the form of higher closing costs. 

The other requirement that will most dramatically affect closings is the rule that Borrowers must receive this new disclosure statement no less than 3 days prior to closing.  If it there is some kind of last-minute change to the paperwork, the clock on the 3-day wait starts all over again - A delay of game resulting in a serious penalty...

Common situations can now derail a closing.  Take, for example, the requirement that any adjustment between the parties in an amount greater than $100 must be on the HUD

In the "old days" if you sold a house with oil heat, and you would collect a check at closing from the buyer for the oil in the tank.  If you remember this on the day of closing, the HUD must be changed, and the 3-day waiting period begins again.  Head's up to realtors, sellers, and buyers... these situations need to be handled like "don't ask, don't tell"  - or done quietly in the basement boiler room...

As if it wasn't hard enough to get everyone to a speedy closing... 

Posted by

Margo Otey

Hi Performance...Outstanding Results!


(508) 439-9717

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Edward Gilmartin
CRE - Boston, MA

Never ask government to simlify anything...they triple the paperwork explaining the new changes made to make it simpler.

Dec 07, 2012 09:39 PM
Richard Iarossi
Coldwell Banker Residential Brokerage - Crofton, MD
Crofton MD Real Estate, Annapolis MD Real Estate


Well, nobody liked the old forms, so lets get ready for some more complaints.


Dec 07, 2012 09:42 PM
Richard Weisser
Richard Weisser Realty - Newnan, GA
Richard Weisser Retired Real Estate Professional


Oh wow, this is really going to make scheduling a closing a logistical nightmare. 

Dec 07, 2012 09:43 PM
Margo Otey

@EG: Nothing was simplified on the new form. Add to that the need to retrain everyone from the buyer/seller to bank to lawyer to realtor... nothing simple about any of it.

Dec 07, 2012 09:44 PM
Margo Otey

@RW: I know they don't enforce the 3-day rule now, so maybe they won't going forward either?  There is going to be a need to sit down and review a 5 page document in advance of the closing with the buyer/seller however, so who is going to do that?  the bank? the broker? We all need to know how to interpret/understand the new form.

Dec 07, 2012 09:46 PM
Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Central Maryland

If it's not broke, why fix it? I agree that the Title Companies are going to increase their fees to cover the new expense.

Dec 07, 2012 09:49 PM
Josh and Jenn McKnight Team
Keller Williams Real Estate - Horsham, PA
The last thing needed is more regulation to slow up the process
Dec 07, 2012 09:57 PM
Margo Otey

I agree that costs will go up.  

I recently had a closing that was part of a chain of 3 homes which all needed my buyer to close on time in order to make all their deadlines.  Would a snafu on the HUD at my closing and the subsequent delay cause the others to "default"?  I think this is a BIG issue that needs discussion - do HUD delays put buyers in default?

Dec 07, 2012 10:03 PM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thanks for sharing the information. This means more closings will be delayed at the last minute.

Dec 07, 2012 10:17 PM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

The old RESPA rule was just fine ! Buyer was to receive the HUD 1 24hrs. prior to settlement !

Dec 07, 2012 10:28 PM
Andrew Mooers | 207.532.6573
Northern Maine Real Estate-Aroostook County Broker

The HUD worked fine but because we are used to it, understand the location of this and that line and where everything goes, time to shake it up, waste time and create more misunderstanding and frustration in one of the most emotional experiences, buying, selling real estate property listings.

Dec 07, 2012 10:40 PM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

Simplification through multiplication. Do we still have to read it backwards?

Dec 07, 2012 10:44 PM
Randy Bocook
Keller Williams Coastal Area Partners - Richmond Hill, GA
Selling Coastal Georgia

I did not know that information. I am going to talk to my lender and attorney this week.

Dec 07, 2012 10:54 PM
Rich Cederberg
eXp Realty - Albuquerque, NM
eXp Realty Agent Albuquerque

I'm all for making the process more understandable and fair for consumers, but this has gotten out of hand. Here's how the HUD portion of closing goes here in NM. The closer says here's the HUD form, now let's begin by turning to page 2. ??? Now flip back to page 1, but wait, there is this lump of seller contributions on the buyer's side so let's flip to page 4. How in the world is adding to this going to simplify? And who are we kidding, this is going to cause all closings to be delayed by at least 3 days. 

Dec 07, 2012 11:37 PM
Ira Bodenstein
PNC Mortgage - Montclair, NJ
NMLS#: 445143

Good information, I have not heard of the 3-day rule.  I am not sure it will delay closings but would require the HUD 1 to be prepared early.  One constant complaint I hear from borrowers is the inability to determine how much cash they need at closing.  This 3-day rule will require all to be on their game early and provide consumers with information in a timely fashion.  Not a bad idea.


Dec 07, 2012 11:58 PM
John Juarez
The Medford Real Estate Team - Fremont, CA

The requirement that the HUD be available to those who have the biggest stake in the transaction, the buyer and sellers, is not a bad requirement. It will mean that all of the parties – Realtors, lenders, etc. have their information to the escrow company in plenty of time. Yes, there will be some inconvenience and, unfortunately some closings will get delayed, but we will soon look upon the procedure as the normal way that things are done.

Dec 08, 2012 01:18 AM
Beth Paterson
Reverse Mortgages SIDAC, LLC, NMLS #1790592 - Saint Paul, MN
CRMP, NMLS #342859

I agree Margo, more confusing and likely costly (not only $'s but time).  When the "new" forms were implemented a few years ago to "simplify" them for consumers they became more confusing.  Many in the industry can't explain the "simplified" Good Faith Estimate or the HUD let alone expect a borrower to understand them.

I look forward to your future posts sharing your information from the symposium.

Dec 08, 2012 01:29 AM
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Margo -- it is my understanding that the "new, improved" HUD-1 is not yet finalized -- nor has it received final adoption.  It is one of the items put under the purview of the Consumer Financial Protection Bureau which was established by Dodd-Frank to bring most of the various consumer protections under one umbrella.  I just Checked the HUD site, and they are still showing the official form as the one from 2009.  And the CFPB is not showing the new one as ready yet. 

On another note the GFE and TIL are being revised by CFPB to become one document (again larger than the predecessors).

Dec 08, 2012 02:03 AM
Margo Otey

@SC: I just pulled out the form we were given at the symposium - the new 5-page long "Closing Disclosure" is to take the place of the old HUD form.  The speaker told us the mandate in Dodd-Frank is to replace the RESPA AND TILA with a single disclosure.  The form we were given was represeted as the new replacement.  I looked to see if there was some identifying form #, but there is not.  

I have asked attorneys at the closings I have had recently if they have the new forms, and they said they are "ramping up" computer systems and staff to handle the new forms as of January.  Not one of my recent closings took place with the new forms.  So I suppose it's possible there is still some finalizing being done? Getting late to make changes if it's to be implemented next month...


Dec 08, 2012 02:16 AM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Margo - The last time they did this just a few years ago, so many in the industry were confused.  How does this help consumers if those who see it every day don't understand them?

Dec 08, 2012 09:00 AM