An Interactive Tool
prepared and posted 12-2008; note that laws change and forms may be revised at any time
note: the sample form used and work done predates the 01/01/2010 Real Estate Settlement Procedures Act (RESPA) reform efforts which, among other things, revised the HUD-1 form.

The Fair Housing Council ( 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 this part of the homebuying process. We want you to become an informed buyer, to help you make better decisions, and avoid costly mistakes.

To quote Brian Montgomery, the HUD Assistant Secretary for Housing and Federal Housing Commissioner, "The core problem is that too many Americans sign a mountain of documents they don't understand and pay thousands of dollars for services that they've probably never heard of.”

In addition to hyperlinked tips and instructions specific to this form, we have provided you with additional links throughout this page with more general buying and lending information and definitions.

The FHCO would like to give special thanks to the industry professionals, advocates, and colleagues who helped provide the material for this interactive forms project!

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Interactive HUD-1 Settlement Statement now

View the Interactive HUD-1 Settlement Statement in:

Contents of this Page:

Questions about Your Credit or the Mortgage Process
Beware of Predatory Lending
What to Expect Regarding Your HUD-1 Settlement Statement
When is the HUD-1 Distributed?
Using this Interactive Tool

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If you have questions about your credit or the 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://www.oregon.gov/DCBS/
  ---For commercial banks contact the Office of the Comptroller of the Currency at http://www.occ.treas.gov or 800/613-6743
  ---For savings and loans contact the Office of Thrift Supervision at http://www.ots.treas.gov or 800/842-6929
  ---For credit unions contact the National Credit Union Administration at http://www.ncua.gov or 703/518-6330
• To report lending scams contact the State Attorney General Office at 877/877-9392, http://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 http://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.  
• Visit our Home Buying, Credit, & Financial Literacy page at www.FHCO.org/hm_buying.htm for more information. This page includes information on avoiding predatory loans and foreclosure.

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Beware of Predatory Lending:

Most lenders are honest, but there are some who may employ “Predatory lending practices” which victimize and cause harm to uneducated borrowers. Predatory lenders can use their knowledge about how loans are structured to your disadvantage. They target people 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 protected under fair housing laws, we at The Fair Housing Council aim to educate you and the general public about fair housing laws, protected classes, and the threat of predatory lending practices.

Loan officers making these loans often use high-pressure tactics and charge considerably more than reasonable interest rates. In addition, sometimes predatory lenders intentionally lend more than the homebuyer or homeowner can afford to pay back and/or do not fully disclose the loan terms and costs, as 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—an example of a “bait and switch” tactic. Buyers either do not catch the difference, or if they do, feel pressured to accept the new terms or risk "losing the loan," loosing any prepaid costs, and missing out on purchasing the house of their dreams. How does the loan officer explain this change? Usually the excuse is that the lender changed their mind, which may or may not be true.

Sometimes 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 committing yourself to a loan by signing the note and trust deed. Learn more about predatory loans online at http://www.oregondfcs.org or call (866) 814-9710.

Another potentially unscrupulous practice used by some loan officers involves what is known as a Yield Spread Premium or mortgage “broker rebate." A Yield Spread Premium is a "rebate" given to a mortgage broker at the "back end" of a loan transaction in exchange for originating the loan at an interest rate higher than the prevailing market rate. These rebates can amount to several thousand dollars. This can provide an incentive for an unscrupulous loan office to originate the loan at an interest rate much higher than is necessary.

Click here for an eye-opening article entitled “Confusion Leads to Higher Closing Costs.” This article highlights some of the inappropriate and illegal activity that harm ill-informed and unsuspecting homebuyers and homeowners.

You are strongly encouraged to "shop around," that is, call banks yourself for terms and costs; talk to with your credit union if you are a member; talk to more than one mortgage broker. You should also educate yourself on the difference between loan originators who work for a single lender and those who work with several lenders without affiliation. The second group may appear to be a better choice, but sometimes they are not! With regard to the topic of Yield Spread Premiums specifically, following are some questions you should ask:

• Are there any Yield Spread Premiums involved with any loan program you are presenting to me? If so, how much (in dollars) are the rebates?
• Is it possible to get a lower interest rate that does not have any Yield Spread Premium attached to it?
• Would you be willing to show me the "wholesale" rate sheets so that I can see the various interest rates and Yield Spread Premiums? NOTE: brokers currently are not required to show these rate sheets.

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.

Many of the notes provided here were based on article entitled Understanding the HUD-1 Settlement Statement From About.com. FHCO staff and those in the industry have reviewed and added to the “Line by line description” offered at About.com.

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What to Expect Regarding Your HUD-1 Settlement Statement:

After you have chosen a lender and a loan, hired a real estate sales broker, and reached agreement on the purchase of a property, you are on your way to the “closing table.” Closing (http://www.escrowhelp.com/qanda-1.html) 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 share of the 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 liens on the property (such as paying off the seller’s current mortgage or back taxes, etc.) that must be cleared before transfer of ownership can be completed. The settlement agent also sets aside funds for any other documented and agreed upon costs (such as brokerage fees for the real estate brokers involved, etc.).

The HUD-1 is a form used by your escrow officer to itemize all costs 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 (for example, an appraisal, a credit history report, or a Yield Spread Premium) are also included on the HUD-1. They are normally marked "POC," for Paid Outside of Closing. Remember that a Yield Spread Premium may be indicative of predatory practices; refer to the discussion of Yield Spread Premiums offered above on this webpage.

A Federal law called the Real Estate Settlement Procedures Act (RESPA) requires that the HUD-1 form serve as the standard real estate settlement form in all transactions in the U.S. that involve federally regulated residential mortgage loans.  You can download a blank copy of the Uniform Residential Loan Application here: http://homebuying.about.com/cs/titleescrow/a/hud1_settlement.htm. It is a common practice in Oregon for the title company you work with to provide you their own version of the HUD-1 form, almost always in an easier-to-read format, of the same information included in the HUD-1. Escrow officers often review this form with the buyer and seller and assure them that all the information is exactly the same as that provided in the federally required HUD-1 form. It is also worth noting that the terms “settlement” and “closing” may be used interchangeably; “closing” is more commonly used in Oregon and Washington.

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When is the HUD-1 Distributed?

The Real Estate Settlement Procedures Act (RESPA) states that your escrow officer should give you a copy of the HUD-1 at least one day prior to closing. In reality, the escrow officer may receive information needed to complete the form only a few hours—or even less!—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 your closing appointment. If you have questions or identify changes that need to be made to the document, the changes should be dealt with before going to closing in order to assure the documents are exactly as they should be.

The more people who review the HUD-1, the less likely that it will include any errors or omissions. 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, the form may call for recording information from another document that is not available at the time of your closing (such as a trust deed to a new lender). In this example, no one has the needed information until after your closing. Again, if you see a blank line, inquire about it until you are 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 future alteration to the forms.

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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; in addition, if you have any difficulty viewing the document, downloading the latest version may remedy the matter. Download a free copy of Adobe Reader (http://www.adobe.com/products/acrobat/readstep2.html) 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 once 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.

Go to the Interactive HUD-1 Settlement Statement now

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