FAIR HOUSING COUNCIL OF OREGON
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Contents of this Page:
Purpose
What to Expect Regarding Your HUD-1 Settlement Statement
When is the HUD-1 Distributed?
Using this Interactive Tool
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Interactive HUD-1 Settlement Statement
FHCO has provided a copy of the Dept. of Housing and Urban Development (HUD) HUD-1 Settlement Statement with hyperlinked tips and explanations in order to demystify the homebuying process. We provide this material to assist you in becoming an informed buyer who can make educated decisions and avoid predatory lending practices or other unethical behavior you could be subjected to.
Predatory lenders peddle unjustifiably expensive loans to homeowners. They target those with low incomes or those assumed to have poor credit, including racial and ethnic minorities as well as seniors and individuals with disabilities. Since all of these targeted populations are members of groups who are protected under fair housing laws, we at The Fair Housing Council are interested in helping you understand and protect your rights.
People who want to buy a home, consolidate debt, or finance home improvements may enter into predatory loans unknowingly. The loans are often made by loan reps that use high-pressure tactics and charge considerably more than reasonable interest rates. Predatory lenders intentionally lend more than the homeowner can afford to pay back and / or don’t fully disclose the loan terms and costs, as is required by law — two tactics that put homeowners at risk of losing their home.
Another predatory loan practice is to sell one loan product but have paperwork for a different loan product at the closing table. Buyers either don't understand the difference, or if they do, feel pressured to accept these terms or risk "losing your loan" and any prepaid costs. The excuse is that the lender changed their mind, which may or may not be true.
Some times the terms of the loan are changed without disclosure; hence the vital importance that you know how to read your HUD-1 Settlement Statement and understand everything on it before signing it. Learn more about predatory loans online at www.oregondfcs.org, or call (866) 814-9710.
You are strongly encouraged to "shop around", that is, call banks yourself for terms, talk to with yourcredit union if your are a member, and / or talk to more than one mortgage broker. You should also educate yourself on the difference between mortgage brokers that are affiliated with a single bank and those without affiliation. The latter sounds like they would be a better choice, but frequently they are not!
Note that in addition to hyperlinked tips and instructions specific to this form, we have provided you with additional links throughout this document with more general buying and lending information and definitions.
If you have questions about your credit or mortgage process:
- Consult with your chosen lender and / or sales agent.
- To check mortgage lender licenses and registrations contact:
---For state-chartered lending institutions contact the Oregon Dept. of Consumer and Business Services at 866/814-9710, or http://dfcs.oregon.gov
---For commercial banks contact the Office of the Comptroller of the Currency at www.occ.treas.gov or 800/613-6743
---For savings and loans contact the Office of Thrift Supervision at www.ots.treas.gov or 800/842-6929
---For credit unions contact the National Credit Union Administration at www.ncua.gov or 703/518-6330 - To report lending scams contact the State Attorney General Office at 877/877-9392, www.doj.state.or.us, or consumer.hotline@doj.state.or.us.
- For a list of Dept. of Housing and Urban Development (HUD)-approved housing counseling agencies by state visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.
- If you feel you have been a victim of predatory lending, contact the Oregon Dept. of Consumer and Business Services Division of Finance and Corporate Securities at 866/814-9710, or http://dfcs.oregon.gov.
- Read an informative brochure offered by the State of Oregon’s Dept. of Consumer & Business Services on avoiding foreclosure .
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Visit http://www.dontborrowtrouble.com/en/pre_pay.html for important information about prepayment penalties from Freddie Mac.
What to Expect Regarding Your HUD-1 Settlement Statement
After you have chosen a lender and a loan, hired a sales agent, and gotten an accepted offer on a property, you’re on your way to the “closing table.” Closing is the near-end of your purchase transaction where you physically go to a title and escrow office to review and sign all final copies of your loan application and other transaction documents. It is also at closing that you are required to bring your settlement charges or closing costs, that is, the funds needed to close the transaction.
Your settlement agent (also called the closing agent or escrow officer)—a neutral, third party—will collect your closing costs as well as the amount of your loan from your lender and transfer this to the seller. In the process, the escrow officer will apply funds to any documented and agreed upon liens (such as the seller’s current mortgage pay off or back taxes, etc.) that must be cleared before transfer of ownership can be completed. The HUD-1 is a form used by your escrow officer to itemize all charges and credits for you and the seller. It provides a complete list of your incoming and outgoing funds. Any fees associated with the transaction but paid prior to closing (a couple examples are the cost of an appraisal or a credit history report) are also included on the HUD-1. They are normally marked "POC," for Paid Outside of Closing.
The statutes of the Real Estate Settlement Procedures Act (RESPA) require that the HUD-1 form be used as the standard real estate settlement form in all transactions in the U.S. that involve federally related residential mortgage loans.
When is the HUD-1 Distributed?
The Real Estate Settlement Procedures Act (RESPA) states you should be given a copy of the HUD-1 at least one day prior to settlement. In reality, information needed to complete the form may still be coming in to the escrow office up to a few hours before closing. Most buyers and sellers study the statement on their own, with their real estate agent, and with the escrow officer. In preparation for closing, you should request a copy of the Closing Escrow Instructions and read them thoroughly prior to going to closing. If you identify questions or changes that need to be made to the document, the changes should be dealt with before going to the closing, to assure the documents are exactly as they should be.
The more people who review it, the more likely that any errors or omissions will be detected. Here at closing, and indeed throughout your transaction, you are a key player in a cooperative team. Your review is a necessary part of the transaction! Ask as many questions as necessary to help you understand all charges and credits.
Be certain that you thoroughly understand all of your closing documents—including the HUD-1 form—and confirm that all of the information is accurate before signing them.
Do not sign an application or legal document with blanks not filled in or “scratched out” as unscrupulous individuals could alter the document without your knowledge, making it look as if you had signed it with the information s/he had added. If you see a blank line on your HUD-1 form, ask your escrow officer about it. There are very limited occasions in which needed information is not yet available.
For example, if the form calls for recordinginformation of another document (such as a trust deed to a new lender or a subordination of one of the two documents created to be recorded in the transaction) which has not been recorded. No one knows what the information is until after closing, because the document can't be recorded until then. Again, if you see a blank line, inquire about it until you're comfortable with the explanation.
Be certain to obtain a copy of all the documents you sign throughout your transaction and the closing process. This basic recordkeeping is a good practice in general, and will provide proof if there is any alternation to the forms.
Using
this Interactive Tool
Click here to open a copy of the HUD-1 Settlement Statement in Portable Document File (PDF)
format. You will need the Adobe® Reader® software to view this document.
Download a free copy of Adobe Reader if needed.
Once opened, you may read the file online or save a copy by selecting File / Save As and choosing a location on your computer to save the sample HUD-1 form.
Whether reading the file online or saved to your computer, simply roll your mouse over the form to find hyperlinked sections.
LEFT click once on each link to view the instructions relevant to that section. When you’re done with each set of instructions or tips, hit the "Return" button at the bottom or use your browser's "Back" button to continue on with the HUD-1 Settlement Statement.
