Over the holiday, we quietly added the new and substantially revised HUD-1 Settlement Statement to mndocs, the MSBA’s  document and form automation system. The new HUD-1, which has been in the making for some time, is required for most residential loan closings on or after January 1, 2010. Specifically, it is required for all closings on loans for 1-4 family residences where the loan origination process takes place on or after the first of the year.

In automating the form for mndocs, we intentionally simplified our approach this time. Our prior automated HUD-1, which still remains available in mndocs, uses an extensive interview process. We ditched that approach based on user feedback.  Rather than walking you through an interview process, we collect some initial basic information (e.g., seller and buyer information, loan information and terms), then turn you over to the form itself, where you enter financial and other settlement information directly on the HUD-1.

Accordingly, information in the HUD-1, such as amounts transferred from the lender’s Good Faith Estimate, is entered directly on the form, along with information about the real estate commission, escrow funds, taxes, and government recording charges. mndocs, however, does the math for you, adding up all the settlement charges, putting the seller and buyer portions in the right spots, and calculating whether certain charges represent a more than ten percent increase over the GFE (a new requirement).  Like all our automated forms, you still have to supply the brains and knowledge. We just make it easier for you to apply and display that knowledge.

In automating the HUD-1 for mndocs, we found the following resources useful, and these are also included in mndocs to help users complete the form:

• New RESPA Rule FAQs [PDF]. A great listing of common (and not-so common questions) relating to both the Good Faith Estimate and the HUD-1, including line-by-line instructions on what goes into — or does not go into — some fields of the HUD-1.

• HUD Regulations. Line by line instructions on how to fill out the HUD-1. In conjunction with the RESPA Rule FAQs, you should be able to figure out exactly what should happen, for example, in line 803.

In addition to being available as an automated form in mndocs, we’ve also posted a fillable PDF of the form on practicelaw.

Posted by Gregory Luce