HUD-1 Form Uses and Breakdown is a mortgage-market participant involved in loan origination, funding, servicing, or borrower access.
The HUD-1 form, also known as the Settlement Statement, is an itemized list detailing all the financial charges and credits involved in a real estate transaction. This key document is particularly used for reverse mortgage and refinance transactions, providing borrowers a comprehensive breakdown of what they will be paying at closing.
The HUD-1 form originates from the Real Estate Settlement Procedures Act (RESPA) of 1974, aimed at providing transparency in real estate transactions. Historically, it was a critical element in virtually all residential real estate transactions until the introduction of the Closing Disclosure form under the TILA-RESPA Integrated Disclosure (TRID) rule in 2015, which replaced the HUD-1 for most transactions except reverse mortgages and certain refinance transactions.
The form consists of various sections that detail the borrower’s and seller’s charges and credits:
Sections A to I: General information including dates, names, and addresses of the parties involved.
Sections J to L: The summary of the borrower’s transaction.
Sections M to N: The summary of the seller’s transaction.
Sections 1000: Fees related to the loan, like origination charges and lender’s administrative fees.
Sections 1100: Title charges.
Sections 1200: Government recording and transfer charges.
Sections 1300: Additional settlement charges such as pest inspection fees.
Sections 1400: Total settlement charges either by the borrower or seller.
All costs associated with originating and servicing the loan are reconciled in this section, ensuring transparency and compliance with lending guidelines.