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Tag Archives: hud-1 form
Assuming the first two parts in these series haven’t put you to sleep, today we are going to look at page 2 of the HUD settlement statement. Page 2 is also known as Section L, Settlement Charges.
Section 700 covers the real estate broker fees. Here the total commission is calculated based on the selling price of the house. The commission can be split between the multiple agents or brokers. These funds usually come from the seller and this amount is often the single largest seller cost listed on the HUD settlement statement form.
Section 800 details the loan fees. These fees include origination charges, points, as well as fees for associated services like the home appraisal and the cost of pulling the borrower’s credit report. Note that brokers can enter negative numbers in line 802, the adjustment for the interest rate chosen, if the adjustment is a credit.
Section 900 lists advance payments required by the lender. Common entries in this part of the HUD 1 statement are the prorated interest that must be paid during a refinance and premiums for mortgage insurance required when borrowers don’t make sufficiently large down payments.
Section 1000 contains the reserves deposited with the lender to be held in escrow and cover costs such as homeowner’s insurance or the first few months of property taxes. The final line is the adjustment between the single-line amounts and the amount due according to aggregate accounting rules laid in RESPA rules.
Section 1100 is the part of the HUD-1 form where you’ll find charges incurred by the title company and any professionals such as notaries or attorneys. If one entity provides several listed services for a single charge then the aggregate fee can be entered on line 1107 or 1108. Include the line items of the other fees included and the amount won’t have to be broken down onto individual lines.
Section 1200 lists city, county and state recording and transfer charges. Agents who work in multiple jurisdictions must be careful to use the correct tax tables for the sale. Tables can vary by county, city, type of sale or other factors. Most agents use HUD settlement statement software to ensure they enter the figures correctly.
Section 1300 is where you find miscellaneous settlement charges that don’t fit under other categories and finally Section 1400 sums up all these values to show the total charges attributed to the borrower and the seller.
That concludes our trip through the HUD settlement form. It’s a complicated and meticulous document and there is no reason to complete it by hand with inexpensive software readily available. Contact Easy Soft to find out more about Easy HUD and our other legal practice management software.
In our first entry in this series we look at the header, sections A through I. Now let’s move on to sections J and K on the HUD settlement statement form, which break down the borrower’s and seller’s transactions respectively. We are going to talk about these sections together because they are so closely interrelated.
If you are using Easy HUD, our HUD settlement statement software, then you will see some of the boxes here are red and some are blue. Both boxes are calculated automatically by the software as you enter values. The difference is that the values in blue boxes can be changed while the red boxes cannot.
Line 101 (Contract sales price) is the amount from the Agreement of Sale. This value is automatically carried over to line 401 in the seller column. It is also used to compute other values on the form such as broker fees (Section 700) and government charges (Section 1200). These will be covered in a future article.
Line 103 (Settlement Charges to Borr) may be a bit confusing because this value is calculated from information entered later in the HUD-1 form. This value comes from line 1400 (Total Settlement Charges), which in turn is the sum of all charges entered on page 2 of the form.
Values entered in lines 102 and 106-112 for the buyer will automatically be copied over to the corresponding seller lines, 402 and 406-412. The seller values can be changed if for some reason these monies should not go directly to the seller.
After the numbers in sections 100 and 400 have been entered, the HUD software automatically calculates lines 120 (Gross Amount Due From Borrower) and 420 (Gross Amount Due To Seller).
The amount due from the borrower is adjusted by section 200 (Amounts Paid By Or In Behalf of Borrower), including the down payment (line 201), mortgage loan (line 202) or any taxes or assessment fees that will not be paid by the borrower. The values are totaled in line 220 and the difference between line 120 and line 220 is calculated in line 303 (Cash From Borrower).
Section 500 on the HUD 1 provides similar function for the seller side of things. Any money that will not be going directly to the seller, such as funds going to pay off existing mortgages, are listed here. They are summed in line 520 (Total Reduction Amount Due Seller) and then line 520 is subtracted from line 120 to give the amount due the seller in line 603 (Cash To Seller).
These calculations are tedious and prone to error if done by hand. The convoluted structure of the form requires agents to go back and forth from one page to another, which complicates the issue further. Download a demo of Easy HUD from our list of attorney practice management software and see for yourself how much easier real estate transactions can be.
The real estate market seems to be improving nationwide but short sales are still a common transaction seen by agents. Job loss, illness and divorce may prevent a homeowner from being able to keep up mortgage payments and a short sale is a preferable alternative to a foreclosure. Short sales tend to be higher pressure transactions then other real estate deals due to the time frames and emotions involved and everyone wants to get it over with, so it is frustrating when the deal falls after months of waiting due to some error on the HUD-1 form.
Agents and buyers who were indecisive and lackadaisical during the short sale negotiations suddenly pore over the HUD settlement statement form like CSI investigating murder scene. Seemingly trivial problems such a $10 fee entered in the wrong category or a name spelled differently than as listed on the title suddenly become critical problems that threaten to torpedo the deal. Agents should always be careful when completing the paperwork but they need to be especially thorough when it is for a short sale.
Filling out government forms isn’t anyone’s idea of a good time, but Easy Soft real estate closing software eliminates much of the tedium. No longer do you need to enter the same information in several places. Type in the data once in the case file and the software will automatically fill it in on the closing form or any other documents generated. Since you don’t have to keep retyping the information you are less likely to make keying errors on the form.
Another advantage of using HUD settlement statement software is that the computer does the math for you. You don’t need to worry about entering the numbers wrong into the calculator or copying them incorrectly onto the form. Less human interaction means fewer chances for silly mistakes.
With a comprehensive, accurate and mathematically correct form in hand the buyer or lender will have no reason to object to the document or to hold up the short sale. The process proceeds more smoothly meaning fewer headaches for the agent, buyer, seller and lender. Everyone walks away from the table satisfied.
Contact one of the experts at Easy Soft to find out more about how our real estate products and law practice management software automate the tedious aspects of running your business, freeing you to focus on finding more clients and making greater profits. For more info, click here.
Filling out the forms for purchase or refinance of a home is a lot simpler than it used to be before there was a computer on every desk. Nowadays real estate professionals use HUD software to automate the process and ensure accurate completion of all needed paperwork. However not all solutions are created equal and you need to be sure you get an application that meets your needs.
The HUD-1 form is laid out in a fairly rigid manner. There is a specific space for every financial transaction, from title insurance premiums to county taxes to home inspector fees. This makes the process fairly straightforward, although still awfully tedious if done by hand. But what is a real estate agent supposed to do if a particular sale doesn’t fit in the predefined blocks of the form?
Forms can be amended with additional information. Multiple borrowers and sellers can be listed on the form in sections D and E respectively. As detailed below, several sections can be amended with as many line items as necessary to document all associated transactions.
On page 1 of the form, sections 200 (Amounts Paid By Or In Behalf Of Borrowers) and 500 (Reductions In Amount Due To Seller) list standard amounts such as deposits or payoffs of previous mortgage loans, as well as providing blank lines where agents can list other fees and charges. Agents can add pages with as many entries as necessary to list all amounts.
Nearly all sections on page 2 provide blank lines for agents to list miscellaneous charges associated with title charges, loan origination and more. Again, agents can attach to the form as many sheets as necessary to document transactions.
So the law allows agent to amend the form with necessary information, but not all HUD 1 software is capable of providing that flexibility. For example, a fillable PDF or Word form won’t have the capability to add more than a few charges to each section. Even some supposedly “fully-featured” real estate solutions won’t have the flexibility needed to handle all transactions.
It’s important to find legal solutions that offer the option to complete HUD closing statements completely and correctly. You don’t want a product that satisfies only 90% of the transactions you handle. Download a demo of Easy HUD to see how easy and flexible real estate documentation can be.
Real estate transactions are not simply money going from the buyer to the seller. A host of payments must be made to other parties including government agencies, insurance companies, home inspectors…oh and you too. You need to not only keep track of all these charges that come off the HUD 1 but must also determine if the fees have already been paid as part of the mortgage, or will be paid separately by checks you need to mail out. Our hud settlement statement software takes the tedium and guesswork out of this disbursement process so you stop worrying about making sure everyone gets paid.
When you fill out the HUD 1 forms with our software, you’ll notice that a number of the lines include a checkbox labeled Net. As you enter numbers into the form, you can mark any of these boxes to indicate the fee has been netted. That means the fee is rolled up into the gross mortgage and has already been disbursed.
Several of the boxes are automatically checked on the HUD-1 form to reflect fees that are commonly included in mortgages. These include origination charges, items required to be paid in advance by the lender, and initial escrow deposits made with the lender. Any of these can be unchecked if for some reason they were not included in the mortgage. Any prepaid fee marked with a Net box on the HUD forms can be checked and the software will adjust the net mortgage accordingly.
To see the result of the net fees, either press Ctrl-L or click “Tools > Lender Worksheet” in the menu at the top of the screen. Either of these commands brings up the Lender Worksheet. This lists the gross mortgage amount, all items added or deducted by the lender as indicated by the checked Net boxes, and the net mortgage amount. All values are taken from the HUD 1 and the calculations are performed by the software so you now the final net mortgage value is accurate.
What about items not netted? Those are handled by the ledger module, which we’ll explore in another entry.
The advantage of using hud software like Easy HUD is that you have to enter the information only one time. Values are automatically copied to other locations such as the Lender Worksheet and the software takes care of the calculations more quickly and accurately than would be possible with manual calculation.
Accuracy is critical in real estate closing process and you can’t afford to make even innocent mistakes. Don’t trust your HUD-1 form to error-prone manual completion or to software not dedicated to the real estate market. Trust Easy Soft products to do the work quickly, efficiently and accurately.
As a real estate professional, you want to maximize your profits. However too many businesses focus on increasing revenue while forgetting the other half of the equation: reducing expenses. If you can reduce your costs on each transaction, you make more money with every settlement you are part of. One way to cut costs is to find better way to track a property’s mortgage lien release.
Real estate buyers tend to believe that a transaction is done once they sign the papers or once the check clears. Settlement agents know the real conclusion is when the mortgage lien attached to the property’s existing mortgage has been released. Once that happens, the buyer has free and clear title to the property.
Unfortunately the release of mortgage lien doesn’t always occur quickly. Buyers trust their real estate agents to follow up on any post-closing paperwork, and tracking the lien is one of those duties. If the lien doesn’t release quickly, the agent must waste time following up with the lenders. Your time is valuable so when you waste them then you waste money, drive up costs and cut your profits.
The problem is that tracking one mortgage lien is not an effective use of time. It doesn’t take much longer to investigate ten liens or a hundred liens than it does to research one. Wouldn’t it be better to turn that task over to a service that specializes in mortgage lien release tracking? Yes it would.
Easy Soft’s lien release tracking service does the work for you. We keep an eye on any liens attached to a property and let you know as soon as the release of mortgage lien occurs. What’s even better is that this service costs you nothing. Yes, we said nothing. How can we make money if we don’t charge anything? Actually we do charge $35 per lien, but that is a cost you pass through to your client.
How to you use the service? It’s pretty complicated so follow closely: you open EasyHUD, pull up the client’s HUD-1 form and click a button. Phew–done. Okay maybe it’s slightly more complicated that than, but not much. Most of the information will be pulled from the client file so you just have to fill in a couple of additional fields, but that’s about all there is to it.
Find out more about how we can help you run your real estate practice more efficiently by automating processes. EasyHUD and our other legal software programs are designed to address the needs of legal and real estate professionals quickly, simply and affordably.