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mandates on any state, local, or tribal governments nor on the private sector.
Congressional Review of Final Rules
This rule constitutes a ``major rule'' as
defined in the Congressional Review Act (5 U.S.C. Chapter 8). This rule has a 60-day delayed effective date and will be submitted to the Congress in accordance with the requirements of the Congressional Review Act.
List of Subjects
24 CFR Part 203
Hawaiian Natives, Home
improvement, Indians-lands, Loan programs--housing and community development, Mortgage insurance, Reporting and recordkeeping requirements, Solar energy
24 CFR Part 3500
Consumer protection, Condominiums,
Housing, Mortgagees, Mortgage servicing, Reporting and recordkeeping requirements.
For the reasons set out in the
preamble, parts 203 and 3500 of title 24 of the Code of Federal Regulations are amended as follows:
PART 203--SINGLE FAMILY MORTGAGE INSURANCE
1. The authority citation shall
continue to read as follows:
Authority: 12 U.S.C. 1709, 1710, 1715b,
1715z16, and 1715u; 42 U.S.C. 3535(d).
2. In § 203.27, paragraph (a)(2) is
revised to read as follows:
§ 203.27
Charges, fees or discounts.
(a) * * * (2) A charge to compensate the
mortgagee for expenses incurred in originating and closing the loan, provided that the Commissioner may establish limitations on the amount of any such charge.
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT
3. The authority citation shall
continue to read as follows:
Authority: 12 U.S.C. 1709, 1710, 1715b,
1715z16, and 1715u; 42 U.S.C. 3535(d).
4. Section 3500.1 is revised to read as
follows:
§ 3500.1
Designation and applicability.
(a) Designation. This part may be
referred to as Regulation X.
(b) Applicability. The following
sections, as revised by the final rule published on November 17, 2008, are applicable as follows:
(1) The definition of Required use in
§ 3500.2, §§ 3500.8(b), 3500.17, 3500.21,
3500.22, and 3500.23, and Appendices E and MS1 are applicable commencing January 16, 2009.
(2) Section 203.27, the definitions
other than Required use in § 3500.2, § 3500.7, §§ 3500.8(a) and(c), § 3500.9, and Appendices A and C, are applicable commencing January 1, 2010.
5. In § 3500.2, paragraph (b) is
amended by revising the definitions of Application, Good faith estimate, Mortgage broker, and Required use, and by adding, in alphabetical order, the following new definitions of Balloon payment, Changed circumstances, Loan originator, Origination service, Prepayment penalty, Third party, Title service, and Tolerance, to read as follows:
§ 3500.2
Definitions.
* * * * *
(b) * * * Application means the submission of
a borrower's financial information in anticipation of a credit decision relating to a federally related mortgage loan, which shall include the borrower's name, the borrower's monthly income, the borrower's social security number to obtain a credit report, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any other information deemed necessary by the loan originator. An application may either be in writing or electronically submitted, including a written record of an oral application.
Balloon payment has the same
meaning as ``balloon payment'' under Regulation Z (12 CFR part 226).
Changed circumstances means: (1)(i)
Acts of God, war, disaster, or other emergency;
(ii) Information particular to the
borrower or transaction that was relied on in providing the GFE and that changes or is found to be inaccurate after the GFE has been provided. This may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE;
(iii) New information particular to the
borrower or transaction that was not relied on in providing the GFE; or
(iv) Other circumstances that are
particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.
(2) Changed circumstances do not
include:
(i) The borrower's name, the
borrower's monthly income, the property address, an estimate of the value of the property, the mortgage loan
amount sought, and any information contained in any credit report obtained by the loan originator prior to providing the GFE, unless the information changes or is found to be inaccurate after the GFE has been provided; or
(ii) Market price fluctuations by
themselves. * * * * *
Good faith estimate or GFE means an
estimate of settlement charges a borrower is likely to incur, as a dollar amount, and related loan information, based upon common practice and experience in the locality of the mortgaged property, as provided on the form prescribed in § 3500.7 and prepared in accordance with the Instructions in Appendix C to this part. * * * * *
Loan originator means a lender or
mortgage broker. * * * * *
Mortgage broker means a person (not
an employee of a lender) or entity that renders origination services and serves as an intermediary between a borrower and a lender in a transaction involving a federally related mortgage loan, including such a person or entity that closes the loan in its own name in a table funded transaction. A loan correspondent approved under 24 CFR 202.8 for Federal Housing Administration programs is a mortgage broker for purposes of this part. * * * * *
Origination service means any service
involved in the creation of a mortgage loan, including but not limited to the taking of the loan application, loan processing, and the underwriting and funding of the loan, and the processing and administrative services required to perform these functions. * * * * *
Prepayment penalty has the same
meaning as ``prepayment penalty'' under Regulation Z (12 CFR part 226). * * * * *
Required use means a situation in
which a person's access to some distinct service, property, discount, rebate, or other economic incentive, or the person's ability to avoid an economic disincentive or penalty, is contingent upon the person using or failing to use a referred provider of settlement services. In order to qualify for the affiliated business exemption under § 3500.15, a settlement service provider may offer a combination of bona fide settlement services at a total price (net of the value of the associated discount, rebate, or other economic incentive) lower than the sum of the market prices of the individual settlement services
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and will not be found to have required the use of the settlement service providers as long as: (1) The use of any such combination is optional to the purchaser; and (2) the lower price for the combination is not made up by higher costs elsewhere in the settlement process. * * * * *
Third party means a settlement
service provider other than a loan originator. * * * * *
Title service means any service
involved in the provision of title insurance (lender's or owner's policy), including but not limited to: title examination and evaluation; preparation and issuance of title commitment; clearance of underwriting objections; preparation and issuance of a title insurance policy or policies; and the processing and administrative services required to perform these functions. The term also includes the service of conducting a settlement. * * * * *
Tolerance means the maximum
amount by which the charge for a category or categories of settlement costs may exceed the amount of the estimate for such category or categories on a GFE.
6. In § 3500.7, paragraphs (a) through
(e) are revised; paragraph (f) is redesignated as paragraph (h); and new paragraphs (f), (g), and (i) are added, as follows:
§ 3500.7
Good faith estimate or GFE.
(a) Lender to provide. (1) Except as
otherwise provided in paragraphs (a), (b), or (h) of this section, not later than 3 business days after a lender receives an application, or information sufficient to complete an application, the lender must provide the applicant with a GFE. In the case of dealer loans, the lender must either provide the GFE or ensure that the dealer provides the GFE.
(2) The lender must provide the GFE
to the loan applicant by hand delivery, by placing it in the mail, or, if the applicant agrees, by fax, e-mail, or other electronic means.
(3) The lender is not required to
provide the applicant with a GFE if, before the end of the 3-business-day period:
(i) The lender denies the application;
or
(ii) The applicant withdraws the
application.
(4) The lender is not permitted to
charge, as a condition for providing a GFE, any fee for an appraisal, inspection, or other similar settlement service. The lender may, at its option, charge a fee limited to the cost of a
credit report. The lender may not charge additional fees until after the applicant has received the GFE. If the GFE is mailed to the applicant, the applicant is considered to have received the GFE 3 calendar days after it is mailed, not including Sundays and the legal public holidays specified in 5 U.S.C. 6103(a).
(5) The lender may at any time collect
from the loan applicant any information that it requires in addition to the required application information. However, the lender is not permitted to require, as a condition for providing a GFE, that an applicant submit supplemental documentation to verify the information provided on the application.
(b) Mortgage broker to provide. (1)
Except as otherwise provided in paragraphs (a), (b), or (h) of this section, either the lender or the mortgage broker must provide a GFE not later than 3 business days after a mortgage broker receives either an application or information sufficient to complete an application. The lender is responsible for ascertaining whether the GFE has been provided. If the mortgage broker has provided a GFE, the lender is not required to provide an additional GFE.
(2) The mortgage broker must provide
the GFE by hand delivery, by placing it in the mail, or, if the applicant agrees, by fax, email, or other electronic means.
(3) The mortgage broker is not
required to provide the applicant with a GFE if, before the end of the 3- business-day period:
(i) The mortgage broker or lender
denies the application; or
(ii) The applicant withdraws the
application.
(4) The mortgage broker is not
permitted to charge, as a condition for providing a GFE, any fee for an appraisal, inspection, or other similar settlement service. The mortgage broker may, at its option, charge a fee limited to the cost of a credit report. The mortgage broker may not charge additional fees until after the applicant has received the GFE. If the GFE is mailed to the applicant, the applicant is considered to have received the GFE 3 calendar days after it is mailed, not including Sundays and the legal public holidays specified in 5 U.S.C. 6103(a).
(5) The mortgage broker may at any
time collect from the loan applicant any information that it requires in addition to the required application information. However, the mortgage broker is not permitted to require, as a condition for providing a GFE, that an applicant submit supplemental documentation to verify the information provided on the application.
(c) Availability of GFE terms. Except
as provided in this paragraph, the estimate of the charges and terms for all settlement services must be available for at least 10 business days from when the GFE is provided, but it may remain available longer, if the loan originator extends the period of availability. The estimate for the following charges are excepted from this requirement: the interest rate, charges and terms dependent upon the interest rate, which includes the charge or credit for the interest rate chosen, the adjusted origination charges, and per diem interest.
(d) Content and form of GFE. The GFE
form is set out in Appendix C to this part. The loan originator must prepare the GFE in accordance with the requirements of this section and the Instructions in Appendix C to this part. The instructions in Appendix C to this part allow for flexibility in the preparation and distribution of the GFE in hard copy and electronic format.
(e) Tolerances for amounts included
on GFE. (1) Except as provided in paragraph (f) of this section, the actual charges at settlement may not exceed the amounts included on the GFE for:
(i) The origination charge; (ii) While the borrower's interest rate
is locked, the credit or charge for the interest rate chosen;
(iii) While the borrower's interest rate
is locked, the adjusted origination charge; and
(iv) Transfer taxes. (2) Except as provided in paragraph (f)
below, the sum of the charges at settlement for the following services may not be greater than 10 percent above the sum of the amounts included on the GFE:
(i) Lender-required settlement
services, where the lender selects the third party settlement service provider;
(ii) Lender-required services, title
services and required title insurance, and owner's title insurance, when the borrower uses a settlement service provider identified by the loan originator; and
(iii) Government recording charges. (3) The amounts charged for all other
settlement services included on the GFE may change at settlement.
(f) Binding GFE. The loan originator is
bound, within the tolerances provided in paragraph (e) of this section, to the settlement charges and terms listed on the GFE provided to the borrower, unless a new GFE is provided prior to settlement consistent with this paragraph (f). If a loan originator provides a revised GFE consistent with this paragraph, the loan originator must document the reason that a new GFE
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was provided. Loan originators must retain documentation of any reasons for providing a new GFE for no less than 3 years after settlement.
(1) Changed circumstances affecting
settlement costs. If changed circumstances result in increased costs for any settlement services such that the charges at settlement would exceed the tolerances for those charges, the loan originator may provide a revised GFE to the borrower. If a revised GFE is to be provided, the loan originator must do so within 3 business days of receiving information sufficient to establish changed circumstances. The revised GFE may increase charges for services listed on the GFE only to the extent that the changed circumstances actually resulted in higher charges.
(2) Changed circumstances affecting
loan. If changed circumstances result in a change in the borrower's eligibility for the specific loan terms identified in the GFE, the loan originator may provide a revised GFE to the borrower. If a revised GFE is to be provided, the loan originator must do so within 3 business days of receiving information sufficient to establish changed circumstances.
(3) Borrower-requested changes. If a
borrower requests changes to the mortgage loan identified in the GFE that change the settlement charges or the terms of the loan, the loan originator may provide a revised GFE to the borrower. If a revised GFE is to be provided, the loan originator must do so within 3 business days of the borrower's request.
(4) Expiration of original GFE. If a
borrower does not express an intent to continue with an application within 10 business days after the GFE is provided, or such longer time specified by the loan originator pursuant to paragraph (c) above, the loan originator is no longer bound by the GFE.
(5) Interest rate dependent charges
and terms. If the interest rate has not been locked by the borrower, or a locked interest rate has expired, the charge or credit for the interest rate chosen, the adjusted origination charges, per diem interest, and loan terms related to the interest rate may change. If the borrower later locks the interest rate, a new GFE must be provided showing the revised interest rate-dependent charges and terms. All other charges and terms must remain the same as on the original GFE, except as otherwise provided in paragraph (f) of this section.
(6) New home purchases. In
transactions involving new home purchases, where settlement is anticipated to occur more than 60 calendar days from the time a GFE is provided, the loan originator may
provide the GFE to the borrower with a clear and conspicuous disclosure stating that at any time up until 60 calendar days prior to closing, the loan originator may issue a revised GFE. If no such separate disclosure is provided, the loan originator cannot issue a revised GFE, except as otherwise provided in paragraph (f) of this section.
(g) GFE is not a loan commitment.
Nothing in this section shall be interpreted to require a loan originator to make a loan to a particular borrower. The loan originator is not required to provide a GFE if the loan originator does not have available a loan for which the borrower is eligible. * * * * *
(i) Violations of section 5 of RESPA
(12 U.S.C. 2604). A loan originator that violates the requirements of this section shall be deemed to have violated section 5 of RESPA. If any charges at settlement exceed the charges listed on the GFE by more than the permitted tolerances, the loan originator may cure the tolerance violation by reimbursing to the borrower the amount by which the tolerance was exceeded, at settlement or within 30 calendar days after settlement. A borrower will be deemed to have received timely reimbursement if the loan originator delivers or places the payment in the mail within 30 calendar days after settlement.
7. Section 3500.8 is revised to read as
follows:
§ 3500.8
Use of HUD1 or HUD1A
settlement statements.
(a) Use by settlement agent. The
settlement agent shall use the HUD1 settlement statement in every settlement involving a federally related mortgage loan in which there is a borrower and a seller. For transactions in which there is a borrower and no seller, such as refinancing loans or subordinate lien loans, the HUD1 may be utilized by using the borrower's side of the HUD 1 statement. Alternatively, the form HUD1A may be used for these transactions. The HUD1 or HUD1A may be modified as permitted under this part. Either the HUD1 or the HUD 1A, as appropriate, shall be used for every RESPA-covered transaction, unless its use is specifically exempted. The use of the HUD1 or HUD1A is exempted for open-end lines of credit (home-equity plans) covered by the Truth in Lending Act and Regulation Z.
(b) Charges to be stated. The
settlement agent shall complete the HUD1 or HUD1A, in accordance with the instructions set forth in Appendix A to this part. The loan originator must transmit to the settlement agent all
information necessary to complete the HUD1 or HUD1A.
(1) In general. The settlement agent
shall state the actual charges paid by the borrower and seller on the HUD1, or by the borrower on the HUD1A. The settlement agent must separately itemize each third party charge paid by the borrower and seller. All origination services performed by or on behalf of the loan originator must be included in the loan originator's own charge. Administrative and processing services related to title services must be included in the title underwriter's or title agent's own charge. The amount stated on the HUD1 or HUD1A for any itemized service cannot exceed the amount actually received by the settlement service provider for that itemized service, unless the charge is an average charge in accordance with paragraph (b)(2) of this section.
(2) Use of average charge. (i) The
average charge for a settlement service shall be no more than the average amount paid for a settlement service by one settlement service provider to another settlement service provider on behalf of borrowers and sellers for a particular class of transactions involving federally related mortgage loans. The total amounts paid by borrowers and sellers for a settlement service based on the use of an average charge may not exceed the total amounts paid to the providers of that service for the particular class of transactions.
(ii) The settlement service provider
shall define the particular class of transactions for purposes of calculating the average charge as all transactions involving federally related mortgage loans for:
(A) A period of time as determined by
the settlement service provider, but not less than 30 calendar days and not more than 6 months;
(B) A geographic area as determined
by the settlement service provider; and
(C) A type of loan as determined by
the settlement service provider.
(iii) A settlement service provider
may use an average charge in the same class of transactions for which the charge was calculated. If the settlement service provider uses the average charge for any transaction in the class, the settlement service provider must use the same average charge in every transaction within that class for which a GFE was provided.
(iv) The use of an average charge is
not permitted for any settlement service if the charge for the service is based on the loan amount or property value. For example, an average charge may not be used for transfer taxes, interest charges, reserves or escrow, or any type of
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insurance, including mortgage insurance, title insurance, or hazard insurance.
(v) The settlement service provider
must retain all documentation used to calculate the average charge for a particular class of transactions for at least 3 years after any settlement for which that average charge was used.
(c) Violations of section 4 of RESPA
(12 U.S.C. 2604). A violation of any of the requirements of this section will be deemed to be a violation of section 4 of RESPA. An inadvertent or technical error in completing the HUD1 or HUD 1A shall not be deemed a violation of section 4 of RESPA if a revised HUD 1 or HUD1A is provided in accordance with the requirements of this section within 30 calendar days after settlement.
8. In § 3500.9, paragraph (a)(1) is
revised as follows:
§ 3500.9
Reproduction of settlement
statements.
(a) * * * (1) The person reproducing the HUD
1 may insert its business name and logo in section A and may rearrange, but not delete, the other information that appears in section A. * * * * *
9. Section 3500.17 is amended:
a. In paragraph (b) by removing the
definitions of Acceptable accounting method, Conversion date, Phase-in period, Post-rule account, and Pre-rule account;
b. In paragraph (c) by revising the
heading and paragraphs (c)(4), (5), (6), and (8);
c. By removing paragraph (d)(2);
d. By redesignating paragraphs (d)
introductory text and (d)(1) as paragraphs (d)(1) and (d)(2);
e. By adding a new heading to
paragraph (d) and by revising newly designated (d)(1) and (d)(2) introductory text; and
f. By removing paragraph (e)(3), to
read as follows:
§ 3500.17
Escrow accounts.
* * * * *
(c) Limits on payments to escrow
accounts. * * *
(4) Aggregate accounting required. All
servicers must use the aggregate accounting method in conducting escrow account analyses.
(5) Cushion. The cushion must be no
greater than one-sixth (
1
/
6
) of the
estimated total annual disbursements from the escrow account.
(6) Restrictions on pre-accrual. A
servicer must not practice pre-accrual. * * * * *
(8) Provisions in mortgage documents.
The servicer must examine the mortgage loan documents to determine the applicable cushion for each escrow account. If the mortgage loan documents provide for lower cushion limits, then the terms of the loan documents apply. Where the terms of any mortgage loan document allow greater payments to an escrow account than allowed by this section, then this section controls the applicable limits. Where the mortgage loan documents do not specifically establish an escrow account, whether a servicer may establish an escrow account for the loan is a matter for determination by other Federal or State law. If the mortgage loan document is silent on the escrow account limits and a servicer establishes an escrow account under other Federal or State law, then the limitations of this section apply unless applicable Federal or State law provides for a lower amount. If the loan documents provide for escrow accounts up to the RESPA limits, then the servicer may require the maximum amounts consistent with this section, unless an applicable Federal or State law sets a lesser amount. * * * * *
(d) Methods of escrow account
analysis. (1) The following sets forth the steps servicers must use to determine whether their use of aggregate analysis conforms with the limitations in § 3500.17(c)(1). The steps set forth in this section result in maximum limits. Servicers may use accounting procedures that result in lower target balances. In particular, servicers may use a cushion less than the permissible cushion or no cushion at all. This section does not require the use of a cushion.
(2) Aggregate analysis. (i) In
conducting the escrow account analysis using aggregate analysis, the target balances may not exceed the balances computed according to the following arithmetic operations: * * * * *
10. Section 3500.21 is amended by
revising paragraphs (b) and (c) to read as follows:
§ 3500.21
Mortgage Servicing Transfers.
* * * * *
(b) Servicing Disclosure Statement;
Requirements. (1) At the time an application for a mortgage servicing loan is submitted, or within 3 business days after submission of the application, the lender, mortgage broker who anticipates using table funding, or dealer who anticipates a first lien dealer loan shall provide to each person who applies for such a loan a Servicing
Disclosure Statement. A format for the Servicing Disclosure Statement appears as Appendix MS1 to this part. The specific language of the Servicing Disclosure Statement is not required to be used. The information set forth in ``Instructions to Preparer'' on the Servicing Disclosure Statement need not be included with the information given to applicants, and material in square brackets is optional or alternative language. The model format may be annotated with additional information that clarifies or enhances the model language. The lender, table funding mortgage broker, or dealer should use the language that best describes the particular circumstances.
(2) The Servicing Disclosure
Statement must indicate whether the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding. If the lender, table funding mortgage broker, or dealer in a first lien dealer loan will engage in the servicing of the mortgage loan for which the applicant has applied, the disclosure may consist of a statement that the entity will service such loan and does not intend to sell, transfer, or assign the servicing of the loan. If the lender, table funding mortgage broker, or dealer in a first lien dealer loan will not engage in the servicing of the mortgage loan for which the applicant has applied, the disclosure may consist of a statement that such entity intends to assign, sell, or transfer servicing of such mortgage loan before the first payment is due. In all other instances, the disclosure must state that the servicing of the loan may be assigned, sold or transferred while the loan is outstanding.
(c) Servicing Disclosure Statement;
Delivery. The lender, table funding mortgage broker, or dealer that anticipates a first lien dealer loan shall deliver the Servicing Disclosure Statement within 3 business days from receipt of the application by hand delivery, by placing it in the mail, or, if the applicant agrees, by fax, e-mail, or other electronic means. In the event the borrower is denied credit within the 3 business-day period, no servicing disclosure statement is required to be delivered. If co-applicants indicate the same address on their application, one copy delivered to that address is sufficient. If different addresses are shown by co-applicants on the application, a copy must be delivered to each of the co-applicants. * * * * *
11. A new § 3500.22 is added to read
as follows:
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§ 3500.22
Severability.
If any particular provision of this part
or the application of any particular provision to any person or circumstance is held invalid, the remainder of this part and the application of such provisions to other persons or circumstances shall not be affected by such holding.
12. A new § 3500.23 is added to read
as follows:
§ 3500.23
ESIGN applicability.
The Electronic Signatures in Global
and National Commerce Act (``ESIGN''), 15 U.S.C. 70017031, shall apply to this part.
13. Appendix A to part 3500 is revised
in its entirety, including the heading, to read as follows:
Appendix A to Part 3500--Instructions for Completing HUD1 and HUD1a Settlement Statements; Sample HUD1 and HUD1a Statements
The following are instructions for
completing the HUD1 settlement statement, required under section 4 of RESPA and 24 CFR part 3500 (Regulation X) of the Department of Housing and Urban Development regulations. This form is to be used as a statement of actual charges and adjustments paid by the borrower and the seller, to be given to the parties in connection with the settlement. The instructions for completion of the HUD1 are primarily for the benefit of the settlement agents who prepare the statements and need not be transmitted to the parties as an integral part of the HUD1. There is no objection to the use of the HUD1 in transactions in which its use is not legally required. Refer to the definitions section of HUD's regulations (24 CFR 3500.2) for specific definitions of many of the terms that are used in these instructions.
General Instructions
Information and amounts may be filled in
by typewriter, hand printing, computer printing, or any other method producing clear and legible results. Refer to HUD's regulations (Regulation X) regarding rules applicable to reproduction of the HUD1 for the purpose of including customary recitals and information used locally in settlements; for example, a breakdown of payoff figures, a breakdown of the Borrower's total monthly mortgage payments, check disbursements, a statement indicating receipt of funds, applicable special stipulations between Borrower and Seller, and the date funds are transferred.
The settlement agent shall complete the
HUD1 to itemize all charges imposed upon the Borrower and the Seller by the loan originator and all sales commissions, whether to be paid at settlement or outside of settlement, and any other charges which either the Borrower or the Seller will pay at settlement. Charges for loan origination and title services should not be itemized except as provided in these instructions. For each
separately identified settlement service in connection with the transaction, the name of the person ultimately receiving the payment must be shown together with the total amount paid to such person. Items paid to and retained by a loan originator are disclosed as required in the instructions for lines in the 800-series of the HUD1 (and for per diem interest, in the 900-series of the HUD1).
As a general rule, charges that are paid for
by the seller must be shown in the seller's column on page 2 of the HUD1 (unless paid outside closing), and charges that are paid for by the borrower must be shown in the borrower's column (unless paid outside closing). However, in order to promote comparability between the charges on the GFE and the charges on the HUD1, if a seller pays for a charge that was included on the GFE, the charge should be listed in the borrower's column on page 2 of the HUD1. That charge should also be offset by listing a credit in that amount to the borrower on lines 204209 on page 1 of the HUD1, and by a charge to the seller in lines 506509 on page 1 of the HUD1. If a loan originator (other than for no-cost loans), real estate agent, other settlement service provider, or other person pays for a charge that was included on the GFE, the charge should be listed in the borrower's column on page 2 of the HUD1, with an offsetting credit reported on page 1 of the HUD1, identifying the party paying the charge.
Charges paid outside of settlement by the
borrower, seller, loan originator, real estate agent, or any other person, must be included on the HUD1 but marked ``P.O.C.'' for ``Paid Outside of Closing'' (settlement) and must not be included in computing totals. However, indirect payments from a lender to a mortgage broker may not be disclosed as P.O.C., and must be included as a credit on Line 802. P.O.C. items must not be placed in the Borrower or Seller columns, but rather on the appropriate line outside the columns. The settlement agent must indicate whether P.O.C. items are paid for by the Borrower, Seller, or some other party by marking the items paid for by whoever made the payment as ``P.O.C.'' with the party making the payment identified in parentheses, such as ``P.O.C. (borrower)'' or ``P.O.C. (seller)''.
In the case of ``no cost'' loans where ``no
cost'' encompasses third party fees as well as the upfront payment to the loan originator, the third party services covered by the ``no cost'' provisions must be itemized and listed in the borrower's column on the HUD1/1A with the charge for the third party service. These itemized charges must be offset with a negative adjusted origination charge on Line 803 and recorded in the columns.
Blank lines are provided in section L for
any additional settlement charges. Blank lines are also provided for additional insertions in sections J and K. The names of the recipients of the settlement charges in section L and the names of the recipients of adjustments described in section J or K should be included on the blank lines.
Lines and columns in section J which
relate to the Borrower's transaction may be left blank on the copy of the HUD1 which will be furnished to the Seller. Lines and
columns in section K which relate to the Seller's transaction may be left blank on the copy of the HUD1 which will be furnished to the Borrower.
Line Item Instructions
Instructions for completing the individual
items on the HUD1 follow.
Section A. This section requires no entry
of information.
Section B. Check appropriate loan type and
complete the remaining items as applicable.
Section C. This section provides a notice
regarding settlement costs and requires no additional entry of information.
Sections D and E. Fill in the names and
current mailing addresses and zip codes of the Borrower and the Seller. Where there is more than one Borrower or Seller, the name and address of each one is required. Use a supplementary page if needed to list multiple Borrowers or Sellers.
Section F. Fill in the name, current mailing
address and zip code of the Lender.
Section G. The street address of the
property being sold should be listed. If there is no street address, a brief legal description or other location of the property should be inserted. In all cases give the zip code of the property.
Section H. Fill in name, address, zip code
and telephone number of settlement agent, and address and zip code of ``place of settlement.''
Section I. Fill in date of settlement. Section J. Summary of Borrower's
Transaction. Line 101 is for the contract sales price of the property being sold, excluding the price of any items of tangible personal property if Borrower and Seller have agreed to a separate price for such items.
Line 102 is for the sales price of any items
of tangible personal property excluded from Line 101. Personal property could include such items as carpets, drapes, stoves, refrigerators, etc. What constitutes personal property varies from state to state. Manufactured homes are not considered personal property for this purpose.
Line 103 is used to record the total charges
to Borrower detailed in Section L and totaled on Line 1400.
Lines 104 and 105 are for additional
amounts owed by the Borrower, such as charges that were not listed on the GFE or items paid by the Seller prior to settlement but reimbursed by the Borrower at settlement. For example, the balance in the Seller's reserve account held in connection with an existing loan, if assigned to the Borrower in a loan assumption case, will be entered here. These lines will also be used when a tenant in the property being sold has not yet paid the rent, which the Borrower will collect, for a period of time prior to the settlement. The lines will also be used to indicate the treatment for any tenant security deposit. The Seller will be credited on Lines 404405.
Lines 106 through 112 are for items which
the Seller had paid in advance, and for which the Borrower must therefore reimburse the Seller. Examples of items for which adjustments will be made may include taxes and assessments paid in advance for an entire year or other period, when settlement
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occurs prior to the expiration of the year or other period for which they were paid. Additional examples include flood and hazard insurance premiums, if the Borrower is being substituted as an insured under the same policy; mortgage insurance in loan assumption cases; planned unit development or condominium association assessments paid in advance; fuel or other supplies on hand, purchased by the Seller, which the Borrower will use when Borrower takes possession of the property; and ground rent paid in advance.
Line 120 is for the total of Lines 101
through 112.
Line 201 is for any amount paid against the
sales price prior to settlement.
Line 202 is for the amount of the new loan
made by the Lender when a loan to finance construction of a new structure constructed for sale is used as or converted to a loan to finance purchase. Line 202 should also be used for the amount of the first user loan, when a loan to purchase a manufactured home for resale is converted to a loan to finance purchase by the first user. For other loans covered by 24 CFR part 3500 (Regulation X) which finance construction of a new structure or purchase of a manufactured home, list the sales price of the land on Line 104, the construction cost or purchase price of manufactured home on Line 105 (Line 101 would be left blank in this instance) and amount of the loan on Line 202. The remainder of the form should be completed taking into account adjustments and charges related to the temporary financing and permanent financing and which are known at the date of settlement.
Line 203 is used for cases in which the
Borrower is assuming or taking title subject to an existing loan or lien on the property.
Lines 204209 are used for other items
paid by or on behalf of the Borrower. Lines 204209 should be used to indicate any financing arrangements or other new loan not listed in Line 202. For example, if the Borrower is using a second mortgage or note to finance part of the purchase price, whether from the same lender, another lender or the Seller, insert the principal amount of the loan with a brief explanation on Lines 204209. Lines 204209 should also be used where the Borrower receives a credit from the Seller for closing costs, including seller-paid GFE charges. They may also be used in cases in which a Seller (typically a builder) is making an ``allowance'' to the Borrower for items that the Borrower is to purchase separately.
Lines 210 through 219 are for items which
have not yet been paid, and which the Borrower is expected to pay, but which are attributable in part to a period of time prior to the settlement. In jurisdictions in which taxes are paid late in the tax year, most cases will show the proration of taxes in these lines. Other examples include utilities used but not paid for by the Seller, rent collected in advance by the Seller from a tenant for a period extending beyond the settlement date, and interest on loan assumptions.
Line 220 is for the total of Lines 201
through 219.
Lines 301 and 302 are summary lines for
the Borrower. Enter total in Line 120 on Line 301. Enter total in Line 220 on Line 302.
Line 303 must indicate either the cash
required from the Borrower at settlement (the usual case in a purchase transaction), or cash payable to the Borrower at settlement (if, for example, the Borrower's earnest money exceeds the Borrower's cash obligations in the transaction or there is a cash-out refinance). Subtract Line 302 from Line 301 and enter the amount of cash due to or from the Borrower at settlement on Line 303. The appropriate box should be checked. If the Borrower's earnest money is applied toward the charge for a settlement service, the amount so applied should not be included on Line 303 but instead should be shown on the appropriate line for the settlement service, marked ``P.O.C. (Borrower)'', and must not be included in computing totals.
Section K. Summary of Seller's
Transaction. Instructions for the use of Lines 101 and 102 and 104112 above, apply also to Lines 401412. Line 420 is for the total of Lines 401 through 412.
Line 501 is used if the Seller's real estate
broker or other party who is not the settlement agent has received and holds a deposit against the sales price (earnest money) which exceeds the fee or commission owed to that party. If that party will render the excess deposit directly to the Seller, rather than through the settlement agent, the amount of excess deposit should be entered on Line 501 and the amount of the total deposit (including commissions) should be entered on Line 201.
Line 502 is used to record the total charges
to the Seller detailed in section L and totaled on Line 1400.
Line 503 is used if the Borrower is
assuming or taking title subject to existing liens which are to be deducted from sales price.
Lines 504 and 505 are used for the amounts
(including any accrued interest) of any first and/or second loans which will be paid as part of the settlement.
Line 506 is used for deposits paid by the
Borrower to the Seller or other party who is not the settlement agent. Enter the amount of the deposit in Line 201 on Line 506 unless Line 501 is used or the party who is not the settlement agent transfers all or part of the deposit to the settlement agent, in which case the settlement agent will note in parentheses on Line 507 the amount of the deposit that is being disbursed as proceeds and enter in the column for Line 506 the amount retained by the above-described party for settlement services. If the settlement agent holds the deposit, insert a note in Line 507 which indicates that the deposit is being disbursed as proceeds.
Lines 506 through 509 may be used to list
additional liens which must be paid off through the settlement to clear title to the property. Other Seller obligations should be shown on Lines 506509, including charges that were disclosed on the GFE but that are actually being paid for by the Seller. These Lines may also be used to indicate funds to be held by the settlement agent for the payment of either repairs, or water, fuel, or other utility bills that cannot be prorated between the parties at settlement because the amounts used by the Seller prior to settlement are not yet known. Subsequent
disclosure of the actual amount of these post- settlement items to be paid from settlement funds is optional. Any amounts entered on Lines 204209 including Seller financing arrangements should also be entered on Lines 506509.
Instructions for the use of Lines 510
through 519 are the same as those for Lines 210 to 219 above.
Line 520 is for the total of Lines 501
through 519.
Lines 601 and 602 are summary lines for
the Seller. Enter the total in Line 420 on Line 610. Enter the total in Line 520 on Line 602.
Line 603 must indicate either the cash
required to be paid to the Seller at settlement (the usual case in a purchase transaction), or the cash payable by the Seller at settlement. Subtract Line 602 from Line 601 and enter the amount of cash due to or from the Seller at settlement on Line 603. The appropriate box should be checked.
Section L. Settlement Charges. Line 700 is used to enter the sales
commission charged by the sales agent or real estate broker.
Lines 701702 are to be used to state the
split of the commission where the settlement agent disburses portions of the commission to two or more sales agents or real estate brokers.
Line 703 is used to enter the amount of
sales commission disbursed at settlement. If the sales agent or real estate broker is retaining a part of the deposit against the sales price (earnest money) to apply towards the sales agent's or real estate broker's commission, include in Line 703 only that part of the commission being disbursed at settlement and insert a note on Line 704 indicating the amount the sales agent or real estate broker is retaining as a ``P.O.C.'' item.
Line 704 may be used for additional
charges made by the sales agent or real estate broker, or for a sales commission charged to the Borrower, which will be disbursed by the settlement agent.
Line 801 is used to record ``Our origination
charge,'' which includes all charges received by the loan originator, except any charge for the specific interest rate chosen (points). This number must not be listed in either the buyer's or seller's column. The amount shown in Line 801 must include any amounts received for origination services, including administrative and processing services, performed by or on behalf of the loan originator.
Line 802 is used to record ``Your credit or
charge (points) for the specific interest rate chosen,'' which states the charge or credit adjustment as applied to ``Our origination charge,'' if applicable. This number must not be listed in either column or shown on page one of the HUD1.
For a mortgage broker originating a loan in
its own name, the amount shown on Line 802 will be the difference between the initial loan amount and the total payment to the mortgage broker from the lender. The total payment to the mortgage broker will be the sum of the price paid for the loan by the lender and any other payments to the mortgage broker from the lender, including any payments based on the loan amount or loan terms, and any flat rate payments. For
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a mortgage broker originating a loan in another entity's name, the amount shown on Line 802 will be the sum of all payments to the mortgage broker from the lender, including any payments based on the loan amount or loan terms, and any flat rate payments.
In either case, when the amount paid to the
mortgage broker exceeds the initial loan amount, there is a credit to the borrower and it is entered as a negative amount. When the initial loan amount exceeds the amount paid to the mortgage broker, there is a charge to the borrower and it is entered as a positive amount. For a lender, the amount shown on Line 802 may include any credit or charge (points) to the Borrower.
Line 803 is used to record ``Your adjusted
origination charges,'' which states the net amount of the loan origination charges, the sum of the amounts shown in Lines 801 and 802. This amount must be listed in the columns as either a positive number (for example, where the origination charge shown in Line 801 exceeds any credit for the interest rate shown in Line 802 or where there is an origination charge in Line 801 and a charge for the interest rate (points) is shown on Line 802) or as a negative number (for example, where the credit for the interest rate shown in Line 802 exceeds the origination charges shown in Line 801).
In the case of ``no cost'' loans, where ``no
cost'' refers only to the loan originator's fees, the amounts shown in Lines 801 and 802 should offset, so that the charge shown on Line 803 is zero. Where ``no cost'' includes third party settlement services, the credit shown in Line 802 will more than offset the amount shown in Line 801. The amount shown in Line 803 will be a negative number to offset the settlement charges paid indirectly through the loan originator.
Lines 804808 may be used to record each
of the ``Required services that we select.'' Each settlement service provider must be identified by name and the amount paid recorded either inside the columns or as paid to the provider outside closing (``P.O.C.''), as described in the General Instructions.
Line 804 is used to record the appraisal fee. Line 805 is used to record the fee for all
credit reports.
Line 806 is used to record the fee for any
tax service.
Line 807 is used to record any flood
certification fee.
Lines 808 and additional sequentially
numbered lines, as needed, are used to record other third party services required by the loan originator. These Lines may also be used to record other required disclosures from the loan originator. Any such disclosures must be listed outside the columns.
Lines 901904. This series is used to
record the items which the Lender requires to be paid at the time of settlement, but which are not necessarily paid to the lender (e.g., FHA mortgage insurance premium), other than reserves collected by the Lender and recorded in the 1000-series.
Line 901 is used if interest is collected at
settlement for a part of a month or other period between settlement and the date from which interest will be collected with the first
regular monthly payment. Enter that amount here and include the per diem charges. If such interest is not collected until the first regular monthly payment, no entry should be made on Line 901.
Line 902 is used for mortgage insurance
premiums due and payable at settlement, including any monthly amounts due at settlement and any upfront mortgage insurance premium, but not including any reserves collected by the Lender and recorded in the 1000-series. If a lump sum mortgage insurance premium paid at settlement is included on Line 902, a note should indicate that the premium is for the life of the loan.
Line 903 is used for homeowner's
insurance premiums that the Lender requires to be paid at the time of settlement, except reserves collected by the Lender and recorded in the 1000-series.
Lines 904 and additional sequentially
numbered lines are used to list additional items required by the Lender (except for reserves collected by the Lender and recorded in the 1000-series), including premiums for flood or other insurance. These lines are also used to list amounts paid at settlement for insurance not required by the Lender.
Lines 10001007. This series is used for
amounts collected by the Lender from the Borrower and held in an account for the future payment of the obligations listed as they fall due. Include the time period (number of months) and the monthly assessment. In many jurisdictions this is referred to as an ``escrow'', ``impound'', or ``trust'' account. In addition to the property taxes and insurance listed, some Lenders may require reserves for flood insurance, condominium owners' association assessments, etc. The amount in line 1001 must be listed in the columns, and the itemizations in lines 1002 through 1007 must be listed outside the columns.
After itemizing individual deposits in the
1000 series, the servicer shall make an adjustment based on aggregate accounting. This adjustment equals the difference between the deposit required under aggregate accounting and the sum of the itemized deposits. The computation steps for aggregate accounting are set out in 24 CFR § 3500.17(d). The adjustment will always be a negative number or zero (-0-), except for amounts due to rounding. The settlement agent shall enter the aggregate adjustment amount outside the columns on a final line of the 1000 series of the HUD1 or HUD1A statement. Appendix E to this part sets out an example of aggregate analysis.
Lines 11001108. This series covers title
charges and charges by attorneys and closing or settlement agents. The title charges include a variety of services performed by title companies or others, and include fees directly related to the transfer of title (title examination, title search, document preparation), fees for title insurance, and fees for conducting the closing. The legal charges include fees for attorneys representing the lender, seller, or borrower, and any attorney preparing title work. The series also includes any settlement, notary, and delivery fees related to the services covered in this series.
Disbursements to third parties must be broken out in the appropriate lines or in blank lines in the series, and amounts paid to these third parties must be shown outside of the columns if included in Line 1101. Charges not included in Line 1101 must be listed in the columns.
Line 1101 is used to record the total for the
category of ``Title services and lender's title insurance.'' This amount must be listed in the columns.
Line 1102 is used to record the settlement
or closing fee.
Line 1103 is used to record the charges for
the owner's title insurance and related endorsements. This amount must be listed in the columns.
Line 1104 is used to record the lender's
title insurance premium and related endorsements.
Line 1105 is used to record the amount of
the lender's title policy limit. This amount is recorded outside of the columns.
Line 1106 is used to record the amount of
the owner's title policy limit. This amount is recorded outside of the columns.
Line 1107 is used to record the amount of
the total title insurance premium, including endorsements, that is retained by the title agent. This amount is recorded outside of the columns.
Line 1108 used to record the amount of the
total title insurance premium, including endorsements, that is retained by the title underwriter. This amount is recorded outside of the columns.
Additional sequentially numbered lines in
the 1100-series may be used to itemize title charges paid to other third parties, as identified by name and type of service provided.
Lines 12001206. This series covers
government recording and transfer charges. Charges paid by the borrower must be listed in the columns as described for lines 1201 and 1203, with itemizations shown outside the columns. Any amounts that are charged to the seller and that were not included on the Good Faith Estimate must be listed in the columns.
Line 1201 is used to record the total
``Government recording charges,'' and the amount must be listed in the columns.
Line 1202 is used to record, outside of the
columns, the itemized recording charges.
Line 1203 is used to record the transfer
taxes, and the amount must be listed in the columns.
Line 1204 is used to record, outside of the
columns, the amounts for local transfer taxes and stamps.
Line 1205 is used to record, outside of the
columns, the amounts for State transfer taxes and stamps.
Line 1206 and additional sequentially
numbered lines may be used to record specific itemized third party charges for government recording and transfer services, but the amounts must be listed outside the columns.
Line 1301 and additional sequentially
numbered lines must be used to record required services that the borrower can shop for, such as fees for survey, pest inspection, or other similar inspections. These lines may also be used to record additional itemized
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settlement charges that are not included in a specific category, such as fees for structural and environmental inspections; pre-sale inspections of heating, plumbing or electrical equipment; or insurance or warranty coverage. The amounts must be listed in either the borrower's or seller's column.
Line 1400 must state the total settlement
charges as calculated by adding the amounts within each column.
Page 3
Comparison of Good Faith Estimate (GFE) and HUD1/1A Charges
The comparison chart must be prepared
using the exact information and amounts from the GFE and the actual settlement charges shown on the HUD1/1A Settlement Statement. The comparison chart is comprised of three sections: ``Charges That Cannot Increase'', ``Charges That Cannot Increase More Than 10%'', and ``Charges That Can Change''.
``Charges That Cannot Increase''. The
amounts shown in Blocks 1 and 2, in Line A, and in Block 8 on the borrower's GFE must be entered in the appropriate line in the Good Faith Estimate column. The amounts shown on Lines 801, 802, 803 and 1203 of the HUD1/1A must be entered in the corresponding line in the HUD1/1A column. The HUD1/1A column must include any amounts shown on page 2 of the HUD1 in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by or on behalf of the borrower. If there is a credit in Block 2 of the GFE or Line 802 of the HUD1/1A, the credit should be entered as a negative number.
``Charges That Cannot Increase More Than
10%''. A description of each charge included in Blocks 3 and 7 on the borrower's GFE must be entered on separate lines in this section, with the amount shown on the borrower's GFE for each charge entered in the corresponding line in the Good Faith Estimate column. For each charge included in Blocks 4, 5 and 6 on the borrower's GFE for which the loan originator selected the provider or for which the borrower selected a provider identified by the loan originator, a description must be entered on a separate line in this section, with the amount shown on the borrower's GFE for each charge entered in the corresponding line in the Good Faith Estimate column. The loan originator must identify any third party settlement services for which the borrower selected a provider other than one identified by the loan originator so that the settlement agent can include those charges in the appropriate category. Additional lines may be added if necessary. The amounts shown on the HUD 1/1A for each line must be entered in the HUD1/1A column next to the corresponding charge from the GFE, along with the appropriate HUD1/1A line number. The HUD1/1A column must include any amounts shown on page 2 of the HUD1 in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by or on behalf of the borrower.
The amounts shown in the Good Faith
Estimate and HUD1/1A columns for this section must be separately totaled and entered in the designated line. If the total for
the HUD1/1A column is greater than the total for the Good Faith Estimate column, then the amount of the increase must be entered both as a dollar amount and as a percentage increase in the appropriate line.
``Charges That Can Change''. The amounts
shown in Blocks 9, 10 and 11 on the borrower's GFE must be entered in the appropriate line in the Good Faith Estimate column. Any third party settlement services for which the borrower selected a provider other than one identified by the loan originator must also be included in this section. The amounts shown on the HUD1/ 1A for each charge in this section must be entered in the corresponding line in the HUD1/1A column, along with the appropriate HUD1/1A line number. The HUD1/1A column must include any amounts shown on page 2 of the HUD1 in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by or on behalf of the borrower. Additional lines may be added if necessary.
Loan Terms
This section must be completed in
accordance with the information and instructions provided by the lender. The lender must provide this information in a format that permits the settlement agent to simply enter the necessary information in the appropriate spaces, without the settlement agent having to refer to the loan documents themselves.
Instructions for Completing HUD1A
Note: The HUD1A is an optional form that
may be used for refinancing and subordinate- lien federally related mortgage loans, as well as for any other one-party transaction that does not involve the transfer of title to residential real property. The HUD1 form may also be used for such transactions, by utilizing the borrower's side of the HUD1 and following the relevant parts of the instructions as set forth above. The use of either the HUD1 or HUD1A is not mandatory for open-end lines of credit (home-equity plans), as long as the provisions of Regulation Z are followed.
Background
The HUD1A settlement statement is to be
used as a statement of actual charges and adjustments to be given to the borrower at settlement, as defined in this part. The instructions for completion of the HUD1A are for the benefit of the settlement agent who prepares the statement; the instructions are not a part of the statement and need not be transmitted to the borrower. There is no objection to using the HUD1A in transactions in which it is not required, and its use in open-end lines of credit transactions (home-equity plans) is encouraged. It may not be used as a substitute for a HUD1 in any transaction that has a seller.
Refer to the ``definitions'' section (§ 3500.2)
of 24 CFR part 3500 (Regulation X) for specific definitions of terms used in these instructions.
General Instructions
Information and amounts may be filled in
by typewriter, hand printing, computer
printing, or any other method producing clear and legible results. Refer to 24 CFR 3500.9 regarding rules for reproduction of the HUD1A. Additional pages may be attached to the HUD1A for the inclusion of customary recitals and information used locally for settlements or if there are insufficient lines on the HUD1A. The settlement agent shall complete the HUD1A in accordance with the instructions for the HUD1 to the extent possible, including the instructions for disclosing items paid outside closing and for no cost loans.
Blank lines are provided in Section L for
any additional settlement charges. Blank lines are also provided in Section M for recipients of all or portions of the loan proceeds. The names of the recipients of the settlement charges in Section L and the names of the recipients of the loan proceeds in Section M should be set forth on the blank lines.
Line-Item Instructions
Page 1
The identification information at the top of
the HUD1A should be completed as follows:
The borrower's name and address is
entered in the space provided. If the property securing the loan is different from the borrower's address, the address or other location information on the property should be entered in the space provided. The loan number is the lender's identification number for the loan. The settlement date is the date of settlement in accordance with 24 CFR 3500.2, not the end of any applicable rescission period. The name and address of the lender should be entered in the space provided.
Section L. Settlement Charges. This section
of the HUD1A is similar to Section L of the HUD1, with minor changes or omissions, including deletion of lines 700 through 704, relating to real estate broker commissions. The instructions for Section L in the HUD 1, should be followed insofar as possible. Inapplicable charges should be ignored, as should any instructions regarding seller items.
Line 1400 in the HUD1A is for the total
settlement charges charged to the borrower. Enter this total on line 1601. This total should include Section L amounts from additional pages, if any are attached to this HUD1A.
Section M. Disbursement to Others. This
section is used to list payees, other than the borrower, of all or portions of the loan proceeds (including the lender, if the loan is paying off a prior loan made by the same lender), when the payee will be paid directly out of the settlement proceeds. It is not used to list payees of settlement charges, nor to list funds disbursed directly to the borrower, even if the lender knows the borrower's intended use of the funds.
For example, in a refinancing transaction,
the loan proceeds are used to pay off an existing loan. The name of the lender for the loan being paid off and the pay-off balance would be entered in Section M. In a home improvement transaction when the proceeds are to be paid to the home improvement contractor, the name of the contractor and the amount paid to the contractor would be
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entered in Section M. In a consolidation loan, or when part of the loan proceeds is used to pay off other creditors, the name of each creditor and the amount paid to that creditor would be entered in Section M. If the proceeds are to be given directly to the borrower and the borrower will use the proceeds to pay off existing obligations, this would not be reflected in Section M.
Section N. Net Settlement. Line 1600
normally sets forth the principal amount of the loan as it appears on the related note for this loan. In the event this form is used for an open-ended home equity line whose approved amount is greater than the initial amount advanced at settlement, the amount shown on Line 1600 will be the loan amount advanced at settlement. Line 1601 is used for
all settlement charges that both are included in the totals for lines 1400 and 1602, and are not financed as part of the principal amount of the loan. This is the amount normally received by the lender from the borrower at settlement, which would occur when some or all of the settlement charges were paid in cash by the borrower at settlement, instead of being financed as part of the principal amount of the loan. Failure to include any such amount in line 1601 will result in an error in the amount calculated on line 1604. Items paid outside of closing (P.O.C.) should not be included in Line 1601.
Line 1602 is the total amount from line
1400.
Line 1603 is the total amount from line
1520.
Line 1604 is the amount disbursed to the
borrower. This is determined by adding together the amounts for lines 1600 and 1601, and then subtracting any amounts listed on lines 1602 and 1603.
Page 2
This section of the HUD1A is similar to
page 3 of the HUD1. The instructions for page 3 of the HUD1, should be followed insofar as possible. The HUD1/1A Column should include any amounts shown on page 1 of the HUD1A in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by the borrower. Inapplicable charges should be ignored.
BILLING CODE 421067P
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