Tuesday, August 09, 2011

query: what is a fully executed HUD-1

Thank you for the query.  This one really points to the regular use of industry lingo that is unfamiliar to most consumers.  We toss around phrases like this and just expect that people know what the heck we are talking about, eh?  ;)

HUD-1 refers to a form created by the federal government under the Real Estate Settlement Procedures Act, RESPA.  The form is used in most real estate related closings as a balance sheet for the movement of the money.  It's an official receipt and record of money part of the transaction.  Some old fashioned attorneys might want to use a different home-brewed form if they are closing a transaction that isn't subject to RESPA rules.  I suggest you ask them to use a HUD-1 instead because it's uniform and if you ever have to produce your settlement statement as evidence, the HUD-1 will be recognized.  People might not believe you had a closing if you can't produce a HUD-1 to prove it.

There are three versions of the HUD-1 in general use.  The old [pre-2010] style two page HUD-1 is often used for cash transactions and commercial mortgage transactions.  The current [RESPA 2010] three page HUD-1 is used for most residential mortgage transactions.  There is a HUD-1a form used for home equity loans.

Fully executed means signed by everyone.  In a purchase transaction, everyone means, the buyers, sellers and settlement agent.  In a refinance transaction, everyone means the borrowers and the settlement agent.

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