Uniform Settlement Statement “THE HUD”
When it comes to closing time the consumer is often overwhelmed by what seems like an ocean of papers to sign. The question often comes up: “Did I sign my first born away?”
The Uniform Settlement Statement better known as the “HUD” designed by the Department of Housing and Urban Development is required to be used on all loan closings covered by RESPA. The Real Estate Settlement Procedures Act (1974) was passed to ensure all consumers are provided information regarding the cost of mortgage settlements and to protect them from abusive costly practices. RESPA is administered and enforced by the Consumer Financial Protection Bureau (CFPB).
The HUD is usually sent to the agent by the closing office (attorney’s office in Georgia) a day or two before the transaction is scheduled to close. The agent reviews the HUD to ensure all the numbers are correct, and then presents it to his client. The agent goes over it with his client to ensure the buyer/seller fully understands the charges and everything is correct.
The HUD shows all the debits and credits of the transaction. The form has two sides, one the borrower’s side and the other the seller’s side. The first page is a summary of all the charges, and listed by category. On the second page of the HUD breaks down all the summary amounts on the first page. There are standard items which are designated to be paid by the buyer or seller, ex. seller paying off a mortgage, located on the seller’s side of the form. Other costs of closing will depend on the sales contract agreed to by the buyer and seller. In some cases lender guidelines and local law will determine who pays certain charges.
The HUD by giving all the details of the transaction makes it clears for consumers what they must pay.