What is a HUD statement?

The purpose of a HUD statement

A HUD statement is designed by the Department of Housing and Urban Development to record any costs associated with a mortgage transaction. This includes loan fees, assessments, required payments and other closing costs related to the home loan.

HUD statements “detail numerous common fees — some of the most frequent ones being loan origination fees, appraisal fees, title insurance fees and escrow deposits,” said Esther Strauss, co-founder of Step by Step Business.

“Each fee reflects a part of the complex process of real estate transactions, where services like evaluating the home's value (appraisal) or ensuring the legal propriety of the ownership transfer (title insurance) are crucial,” Strauss explained.

HUD statements help summarize any costs or credits when completing a reverse mortgage transaction. While there are placeholders on the HUD-1 statement for home sales price and seller information, these statements are no longer used for real estate sales transactions and those sections are typically left blank.

While HUD-1 statements are generally used only for reverse mortgages, there are certain HUD statements (the HUD-1A) that are also used to detail some mortgage refinancing transactions.

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Key components of a HUD statement

A HUD statement is a three-page document that is split into a few sections. Each section summarizes the costs and credits associated with a reverse mortgage or mortgage refinance transaction. Here’s what’s included in each HUD statement section:

HUD statement Page 1

• Type of loan. The top of the form includes your personal information, property address and basic loan information, including the type of loan being issued.
• Borrower transactions. The left-hand column of the HUD-1 includes borrower costs and credits, including amounts due from the borrower, prepaid items, new loan amounts, existing loan balances and other items still to be paid.
• Seller transactions. The right-hand side of the HUD-1 includes seller transactions, including contract sales price, items paid in advance, reductions in amount due to the seller and items still to be paid.

HUD statement Page 2

• Broker fees. This lists any fees associated with a real estate broker.
• Loan fees. This includes loan origination fees and discount points. It also includes third-party fees such as appraisal, credit report, tax service and flood certification fees.
• Items paid in advance. This includes daily interest charges, mortgage insurance premiums and prepaid property taxes.
• Title charges. This includes charges for title insurance and any title-related closing fees.
• Government fees. This includes fees such as recording charges, title transfer fees and other taxes.
• Additional charges. This includes any other charges at settlement not listed.

HUD statement Page 3

• Comparison of Good Faith Estimate (GFE) and HUD-1 Charges. This compares origination fees, discount points and taxes from the original estimate to the final HUD statement.
• Government recording fees. This lists the government recording fees for the transaction (which cannot increase more than 10%).
• Charges that can change. This lists charges that can change even after the HUD statement is finalized, such as escrow deposits, daily interest and homeowners insurance.
• Loan terms. This details the terms of your new loan, including loan amount, term length, interest rate and monthly payment.

How to read a HUD statement

A HUD statement is broken down into sections with a number code for each section. This gives you a reference for reading through the document so you can quickly scan for pertinent information. Here’s how to read a HUD statement:

• Section 100 - 300. This section is on the first page and details your (the borrower’s) transactions. Take a close look at each line item, especially the last one labeled “Cash at Settlement.” This is the amount you’ll need to bring to the closing table to complete the loan.
• Section 400 - 600. This is now obsolete, as real estate sales and purchases use the new Closing Disclosure form.
• Section 700 - 800. This will detail your broker and loan fees. Make sure each line item is accurate to avoid being overcharged.
• Section 900 - 1000. This details what you need to pay in advance to close the loan and the deposit amounts to be sent to escrow. Make sure the estimates are accurate.
• Section 1100 - 1300. This will detail additional fees for closing the loan, including title fees and government charges. While government fees can’t be changed, make sure the title insurance fees are accurate.
• Page 3. The final page will compare your original loan estimate against the final numbers. It also details your final loan terms. Make sure nothing looks out of place, and be prepared to challenge any charge increases you don’t agree with.

Common fees found on HUD statements

There are several fees and charges that will appear on a HUD statement. While these statements are now used exclusively for reverse mortgage transactions, here are a few common fees to watch out for:

• Loan origination fee. This is the fee charged by your lender for giving you a loan.
• Discount points. This is an amount you pay to lower your interest rate on the loan.
• Appraisal fee. This is any fee paid to an appraiser to give a market value of your home to the lender.
• Credit report fee. This is a fee charged for pulling your credit report.
• Flood certification fee. This is a fee paid for an evaluation of your property to determine whether you are in a Federal Emergency Management Agency (FEMA) flood zone.
• Daily interest charge. This is a prorated interest charge for your loan until your first payment is made.
• Mortgage insurance premium. This is a charge for borrowers who don’t have a 20% down payment or for a loan that does not come with mortgage insurance.
• Prepaid property tax. This is any amount paid for upcoming property taxes.
• Title charges. These are title-related costs for services hired to review your title and title insurance.
• Government fees. These are unavoidable fees for recording this transaction and transferring ownership of the property (if applicable).

Bottom line

While HUD statements are not as common as they once were, due to the transition to the Closing Disclosure form for most residential real estate transactions, they remain a crucial document in certain types of real estate purchases and refinancing.

Knowing how to read your HUD statement can help you better understand the fees and costs associated with your specific real estate transaction.