If you’re going to work a short sale or do on a regular basis, lenders require a package deal that includes a rule the purchase agreement, a letter of authorization, a hardship letter, a statement of the financial statements of the seller, a listing contract (maybe), and a complete “preliminary” HUD-1 form.
I used the word here because the original offer preliminary, the HUD-1 numbers are not accurate (but the form needs to be precise) and are normally the responsibility of investors. As the business moves through the approval process and towards a formal closing, a title company normally produce a final HUD-1, with exact numbers.
A sample form can be found on the HUD website.
One of the most important skills for the foreclosure investor must be able to successfully complete the HUD-1 settlement statement. In a short sale (and “normal” real estate transactions), this form dictates who gets the amount of money. Period.
The HUD-1 form is under the control of the Real Estate Settlement Procedures Act (RESPA). This act states that the form must be distributed to all parties one day before closing. However, some closures are very short time constraints and the final HUD-1 may be released shortly before closing time.
The two-page form is divided into sections, with details on the right Seller and Buyer details on the left. These sections are further broken down by line number. We’ll focus on the seller’s form, because this is the side that lenders consider a short sale.
The top of the module is simple with the name of the seller, the buyer’s name, address of property, etc.
Line 401 is the gross offering price.
The lines 504 and 505 represent the net offers the first and 2nd lien holders. These two lines are the most important in the provision of short sale.
Lines 510-519 are used to pro-ration of taxes for the current year, along with note past due taxes or liens Hoa.
Lines 700-704 are to note the use of real estate commission fees.
Lines 1100-1113 are used for expense account title, closing expenses, etc.
Lines 1300-1305 are for the additional settlement fees.
Note that the lenders are looking for line 603 to zero, as this is the case of understanding seller.
Since most title companies will not make many prelim HUD-1 on deals that do not close, it is imperative that the investor foreclosure lean as carefully fill the form HUD-1. It ‘s the greatest instrument used in the process of negotiation.
The key is to understand that we must be ever more diligent in calculating the bid. Note, the formulas used to calculate expected long-term deals in real estate are not related to fix and flip formulas, and these deals are usually disastrous to unsuspecting investors.
The HUD-1 is a form used by the settlement agent (also called the closing agent) to list all the costs imposed upon a borrower and seller for a real estate transaction. It gives each party a complete list of their funds in and out. Fees associated with the transaction, but paid before closing are also included on the HUD. They are normally marked “POC” for paid outside of closing.
When is the HUD-1 used?
The statutes of the Real Estate Settlement Procedures Act (RESPA) to require the form to be used as the standard composition in all real estate transactions in the United States, involving its federal mortgage. It is used for almost all transactions involving a buyer and seller, including cash closings.
When is the HUD-1 Distributed?
RESPA states that you should be given a copy of the HUD-1 at least one day prior to settlement. In real life, entries may still be coming in a few hours before closing. Most buyers and sellers study the statement on their own, with their real estate agent, and the settlement agent. The more people to review it, the more likely that errors will be detected. Do not assume that the closing agent is always correct. Mistakes happen, many times an error was found at the last minute. Ask as many questions as necessary to help you understand all the charges.
Section B-1 offers real estate education HUD settlement with the type of loan.
Articles in this section include: the type of loan: You select the type of loan, such as whether it is FHA, VA, conventional and whether insured or not. Note that the sample HUD-1 is used by the government website does not show the point 6, Seller Financing. This article has been used by the title companies, in most cases. The identification numbers for the loan and the transaction: the title company has a file number for the transaction, and the lender will have a number of loan. If it is a secured loan, there will be a file number.
** Departure www.DamonTheAgent.com
Answer by A C
I’ve never done it, but just playing around in Calyx – try going to the Interfaces drop down (at the top) and scroll down to title/escrow…if your title/escrow company is in there, it looks as if you can Send Data and that would do it….but being that title/escrow doesn’t produce a HUD until they get lender instructions, this may be all for naught. Hope you get your loan closed!
Add your own answer in the comments!
** From 1 January 2010, the latest changes to the Real Estate Settlement Procedures Act (RESPA) entered into force for all the “creative lending” – banks Credit and mortgage broker – managing federal loans for residential real estate. RESPA revisions were intended to provide consumers with a means to better understand their obligations in terms of the loan. The burden for ensuring compliance with these regulations, however, falls exactly on the banks.
good faith estimate (GFE)
In addition, the GFE must contain a detailed list of all the expenses of origin (including yield spread premium if applicable) and the list of all transaction costs.
The GFE must be provided in a standardized form approved by HUD. Lenders are not allowed to make changes to any language on the form or add additional pages or additions. If the loan provides for a payment other than monthly, then the lender must make a monthly payment of the loan for the purpose of the form.
If the borrower requires two mortgages for a single property, a GFE should be completed for each loan.
While a mortgage broker can provide the borrower with a copy of the GFE within three days of business, the ultimate responsibility to ensure that the borrower has received a copy of it falls within the allotted time the lender.
A chart is included in the HUD-1, which compares all actual costs at closing for the estimation of the costs contained in the GFE. If any of the actual costs exceed the estimates provided in the GFE by more than the tolerance given, then the lender is prohibited from accepting the old from the borrower.
The HUD-1 form must also include a final summary of the key terms of the loan. The creditor must provide this information to the settlement agent in a format that allows the agent to fill in the blanks on the HUD-1 without having to refer to the documents of the loan value.
Just as the GFE or the lender or settlement agent can change the language included in the standard form HUD-1. The borrower must be provided with a copy of the form completed and signed before leaving the closure.
• • Origination charges adjusted origination charges after the interest rate has been locked • Points to lock in interest rates • Government transfer taxes 10% Tolerance:
• Lender required settlement services (if the borrower chooses a servicer provided or identified by the lender) • Services required under Lender and title insurance (if the borrower chooses a servicer provided or identified by the lender) • Owner’s title insurance (if the borrower chooses a servicer provided or identified by the lender) • Registration fees • Government Services required that the borrower may purchase if the borrower chose to selected companies or identified by creditor
Article by Michael Guzman
The Real Estate Settlement Procedures Act of 1974 stipulates that all real estate transactions must accomplish a HUD-1 Settlement Statement. RESPA is a Consumer Protection law enforced by the federal Housing and Urban Development Department (HUD).
The HUD-1 Settlement Statement contains all information regarding costs involved in the sale of any property. A settlement statement is typically prepared by either a lender or a third party known as an escrow agent, who must follow the regulations set forth in the RESPA.
Before the enactment of RESPA, the secondary costs in real estate transactions eat up a huge amount of money both for the seller and the buyer. These secondary costs include broker’s fees and appraiser’s fees, some of which are required by lenders in real estate deals. Unfortunately, in every transactions, the buyer or the seller do not have an estimate on the cost of these secondary expenses or hidden costs. In the early 1970s, there was a huge clamor to change the law to remove these hidden costs and the secretary of HUD and the administrator of the Veterans’ Affairs lobbied Congress to reform the then real estate law to reduce the costs on the consumers.
RESPA has four distinct functions. The first is to improve advance disclosure of settlement costs to home buyers and sellers. Second, to eliminate corruption such as kickbacks or referral fees that unfairly inflate settlement costs. Third, to reduce the amounts home buyers are required to deposit in an escrow account-in this case, a bank account established to ensure the payment of real estate taxes and insurance. Finally, Congress wished to modernize an outmoded system of local record keeping of land title information.
RESPA also requires lenders to keep settlement statement for five years or until such time the loan has been disposed, as well as to provide full accounting of sales costs. While there is no provision for civil penalties to lenders who will not properly disclose information, Section 8 of the HUD-1 Settlement Statement, provides anti-corruption measures that spell out criminal and civil liabilities for illegal referral fees. The provision was set to prevent intermediaries in the deal from cheating consumers with any hidden costs.
Congress further expanded the scope of RESPA’s powers in the 1990s. The amended RESPA law expanded to include refinances and subordinate loans, instead of just covering home purchase loans. The revisions were contained in the passage of the Housing and Community Act of 1992. These changes took effect in 1994 after HUD amended its rules (24 C.F.R. pt. 3500). As a result, lenders providing Equity or second mortgage loans, home improvement financing, and mobile home financing came under the regulation of RESPA.
But the expansion of RESPA powers generated reactions from the finance industry which complained of excess regulation. However, the signing by then President George W. Bush of the Housing and Community Development Act, signaled the administration’s reversal of policy from its usual anti-regulatory stance to the benefit of consumes in regulating costs in real estate transactions.
About the Author
Michael Guzman is an entrepreneur and leading provider of various online marketing strategies. He has authored a number of articles in several online sites to promote the businesses of his various clients.
Article by James Boyer
Do you owe more on your home than it is likely to sell for? Are you having big trouble making your mortgage payments and in danger of being foreclosed on? Want to sell your home and just move on with your life? Do you want your real estate agent to do the negotiations with your mortgage company for you? This may or may not be possible depending you your mortgage company, but some will allow your REALTOR to negotiate with them on your behalf. Note this is not a comprehensive list as every mortgage company is different in what they will want to see, but this list should give you a very good idea of what is going to be needed in order to have any chance of having your short sale approved by your home mortgage company.
A non comprehensive list of things you will need to provide to your REALTOR if he or she is to negotiate a short sale for you.
1. All your mortgage information, account #â€™s, balances, contact numbers2. A copy of your Hud1 from the purchase of the home3. A copy of your dead for the home4. Your United States Social Security number, if you have one5. Your work visa information6. Copies of your green card information7. Copies of your past 5 years tax returns8. Copies of your past 5 years bank statements9. Copies of your past 6 months pay stubs10. Your past employer information for 3 years (addresses, job titles, compensation levels)11. Your current employer information (address, job title, compensation level)12. An authorization letter specifically authorizing me to negotiate with the mortgage company on your behalf.13. You will need to put together a hardship letter explaining to the bank why you cannot afford to continue to pay the mortgage on the home, and / or cannot afford sell your home and pay the difference between sale proceeds and the amount of money needed to satisfy all debts against the house.
Note banks do not like short sales. If they believe that you have the capability of fulfilling the mortgage through payments or payoff, they will likely not accept a short sale unless you have showed that you do have the ability to make full mortgage payments and are willing to proceed to foreclosure and negatively impact your credit rating including the likely closure of all credit cards.
In short, home mortgage companies donâ€™t make it easy for you to lose money for them.
About the Author
Written by James Boyer your Chatham NJ REALTOR.Â When it comes to the Chatham NJ real estateÂ market James Boyer is the REALTOR giving you the best real estate search tools, expert advice, and grade A service to ensure that you get the best possible results in your home search and purchase, be that in Chatham New Jerse
More Hud1 Articles
www.Hud1Generator.com – How to create unlimited Hud-1 s from your computer, for all your real estate or short sale closings. Also called Hud-1 statement form, Hud 1 settlement statement, Hud1 software, net sheet, closing statement.
Video Rating: 5 / 5