query: post closing audit reveals a small mistake on the HUD-1

When a post closing audit reveals a small mistake on the HUD-1 form, both the mortgage lender and the title agent should make determinations on their own behalf whether the mistake creates a regulatory compliance issue. If so, they must remedy the situation and circulate a corrected HUD-1 to all parties for signature. Remember we are talking about a small mistake, one that isn't material to the parties but could be of concern to auditors and regulators. The lender will make decisions about compliance issues concerning lending and the title agent will make decisions concerning their own settlement and title insurance fees.

If the small mistake does not impact regulatory or legal issues and it also does not impact the transaction of the seller or the buyer in any material way, you may rectify the matter without circulating a full HUD-1 for execution.

For instance, the lender might notice an error in the borrower's current address. If the lender raise an issue post closing, let them decide whether or not they want a new HUD-1 executed by all. In the cases of small errors like this, most mortgage lenders will either make note and let it go or have you prepare a corrected HUD-1 and justs have the borrower's initial the correction.

If the title agent charged an amount for recording fees that is an overcharge, a post closing refund is sufficient and a new HUD-1 is not required, again, unless the mortgage lender wants it. The title agent should keep a record of the refund with the file in case the file is pulled for an audit.