Understanding The HUD-1 Form, Part 2

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.