PART 2: HUD 1 Settlement Statement and Your Short Sale Package
One of our most frequently Asked questions is “What Should I Represent on the HUD1 for a
Successful Short Sale?”
Quick Recap:
• I appreciate the feedback I received from many agents on the new HUD 1 format…it’s
a little different….Good Faith Estimate attached…This is for Title or Escrow to
complete for the lenders portion of the process…not necessary for Short Sale
negotiator.
• Completing the HUD 1 is the responsibility of your Title or Escrow officer.
• The accuracy fall on your shoulders
• When you speak with your negotiator, be familiar with the HUD1
• Have it in front of you.
• Learn the HUD1 so you make more money!
Here is a quick recap of our last discussion on the importance of the HUD1…
• What is a HUD1?
• The HUD-1 Settlement Statement is a standard form in use which is used to
itemize services and fees charged to the borrower by the lender or broker.
• The form is filled out by your Title or Settlement agent with your direction…but
they will need your direction…this is part of being a highly paid and highly
skilled Real Estate Professional.
• Why is the HUD1 So Important?
• The HUD1 is your main communication to the Short Sale negotiator and the
investor.
• It is used in many cases as the sole decision maker to either accept or deny your
short sale package.
• It must be Clear, Complete and Concise.
• Omitting the HUD or doing it incorrectly will cause the bank not to respond and
in some cases “close” the file. So…Learn to do it right the first time!
• The Right Side of the HUD is the Seller’s Side.
• The HUD1 form is broken up in line items and by category and they are
standard.
• Complete line items A-I as thoroughly as possible
• Always complete Buyers info and Sellers info including address
• I or Settlement Date (45 days out)
• You may have to update every 30 to 45 days
• Taxes increase
• Revised demands from 2nd lien holders
• City or County Lien updates
•
• Section “K”
• In this section, you will present the Contracted Sales Price and all associated
costs of the transaction.
• Line Item 400 – 420 Gross Amount Due to Seller (Bank or Servicer)
• 401 is Contract Sales Price
• 406 & 407 is City & County Taxes respectively
• Line Item 500 – 520 Reduction in Amount Due to Seller (Bank or Servicer)
• In this section you will present the net dollar amounts to 1st and 2nd lien
holders, any recurring and Non-recurring closing costs being paid by
Seller )Bank or Servicer), any Liens or judgments clouding title.
• Line Item 502 is the entire cost of the transaction to the Seller.
• You will complete this line upon completing the balance of HUD1
statement. Same Number as Line item 1400
• Line item 520 is the Contract amount plus any additional unpaid taxes and liens
that may increase the amount of Gross due to seller.
• Line Item 600-603 ; Cash at Settlement From/To Seller
• 603 must be $0.00.
• Line item 700-704 Total Sales/Broker’s Commission
• Always complete with both buyers and sellers Brokers
• Secret:
• If you are both buyer and seller’s agent (double end) then use
your name as the sellers agent and use your brokers name in this
field.
• i.e.: John Smith; Century 21 and Mary Jones; Century
21
• Line item 703: Always ask for 6% or unless otherwise directed by bank at
beginning of process.
• Line item 800-811; Items Payable in Conjunction with Loan
• These are fees that buyer is specifically requesting seller to pay to the buyers
lender
• Secret: Leave this area blank and address “closing costs” on line item
506 as “Seller credit towards Buyer’s RCC & NRCC”
• Line items 900-905: Items Required by Lender to be paid in Advance
• The only fee that will usually be included in this area is the cost of an NHD/Tax
Disclosure Reports.
• Line Items 1000-1009; Reserves Deposited with Lender
• Usually left blank
• Line Items 1100-1113; Escrow and Title Charges
• This is where you present all the charges for support such and Title, Escrow
and transactions fees
• Secret: You can pad an additional amount for your Support staff in a
transaction fee.
• Line Items 1200-1205; Government Recording and Transfer Charges
• Typically there will be transfer taxes charged by Title.
• Line Items 1300-1307; Additional Settlement Charges
• Be careful on the number of items you have in this category as this area is
heavily scrutinized by the negotiators.
• Fees that appear in this area my include but not exclusive to:
• Notary Fees, Pest or Termite Inspections, past delinquent taxes
• Line Item 1400; Total Settlement Charge
• This is the amount that it will cost to complete the Short Sale
• The Purchase Price Amount – Total Settlement Charge = Net Proceeds
to 1st Lien Holder upon Completion of Short Sale
• An area of discussion from last week was Bank of America
• We suggest that you contact BofA Short Sale Department before approaching
Equator.
• BofA Short Sale Department 866-880-1232
• Equator…310-469-9167 Tech Line
• Write Bank of America Corporate and COMPLAIN!
• Bank of America Corporate Center
Mr. Kenneth D. Lewis
100 N. Tryon Street.
Mail Code NC-1-007-18-01
Charlotte, NC 28255
Here is something to remember….“When you generate, you don’t have to tolerate” This
means that the more leads you create the more you will be able to let go of those
uncooperative sellers….better known as Time Wasters! By taking and doing this you
will earn more money by getting more listings.