MYSTERIES OF THE NEW HUD-1 UNCOVERED

August 18, 2009

UNCOVERED

Jim Gosdin, Deborah Yahner and Jennifer Dumas

jgosdin@stewart.comdyahner@stewart.comy @jdumas@stewart.com

©2008 Stewart.

Purpose of RESPA Reform

Promote consumer

Rollups (FKA

loan shopping

(FKA GMPA)

Loan SummarySummary

(FKA Transcript)

©2009 Stewart.

Changes from Proposal

No Closing Script

No Volume Based

DiscountsDiscounts

30-Day Cure

Average Charge For All

©2009 Stewart.

Key Dates

January 16, July 16, January 1, y ,2009

y ,2009 (?)

y ,2010 +

(?)

Six / Twelve Infinity and

©2009 Stewart.

Months (?) Beyond

GFEGFEPage 1

©2009 Stewart.

GFE Page 1

C tibilit ith HUD 1/1ACompatibility with HUD-1/1A

Loan Terms

Summary of Settlement Costs (A+B) (Total Est. Charges)

©2009 Stewart.

GFEPage 2

©2009 Stewart.

GFE Page 2

Line 1 (origination): HUD 801

Li 2 ( dit/ h ) HUD 802Line 2 (credit/charge): HUD 802

Line A (adjusted orig.): HUD 803Line A (adjusted orig.): HUD 803

Line 3 (required): HUD 804 + ,902

Line 4 (title services): HUD 1101

Line 5 (owner’s policy): HUD 1103

©2009 Stewart.

Line 6 (required u shop): HUD 1301

GFE Page 2

Line 7 (govt. recording): HUD 1201

Li 8 (t f t ) HUD 1203Line 8 (transfer tax): HUD 1203

Line 9 (initial escrow): HUD 1001Line 9 (initial escrow): HUD 1001

Line 10 (daily interest): HUD 901

Line 11 (homeowner ins.): HUD 903

Line B (total other services)

©2009 Stewart.

A + B (total estimated charges)

GFEP 3Page 3

©2009 Stewart.

GFE Page 3

Explanation: (1) zero tolerance, (2) 10% tolerance, Tradeoff Table

( d(3) no tolerance (proposed, lower, higher

rate)

Shopping Chart

©2009 Stewart.

New HUD-1/1A

Use with Rollup Lines: Refer to New GFE 803, 1001, 1101,

1201, 1301GFE#

Compare GFE and HUD Charges

Disclose Loan Terms

Charges

©2009 Stewart.

New HUD-1/1A

Permissible Copies of HUD-1 AdvancePermissible Alterations in

HUD-1/1A

pto Seller, Buyer /

Borrower, Lender

Advance Inspection

Disclaimer / Disclose LoanDisclaimer / Signatures

Disclose Loan Terms

©2009 Stewart.

HUD-1Page 1

©2009 Stewart.

HUD-1 Page 1

Subordinate lien financing –currently (1) show net funding Taxes paid at closing –

whatever is customary y ( ) gin column in Line 204, (2) show loan amount outside column,

(3) do separate HUD for each loan

whatever is customary (1st, 2nd page)

Allowable Alterations in

©2009 Stewart.

HUD-1/1A

Items Paid By Seller or Third Party

If ll h If seller pa s chargesIf seller pays charges shown on GFE, credit

to borrower on Lines 204 - 209

If seller pays charges shown on GFE and

credit borrower, charge seller on gLines 506 - 509

You must also identifyYou must also identify on HUD any party

giving credit (paying) if the party isn’t seller

©2009 Stewart.

HUD Seller Credit Example

©2009 Stewart.

HUD-1Page 2

©2009 Stewart.

Broker Fees – 700 Series

Commission Amounts Must

No More Lines 701, 702: Split Amounts Must Be Shown

Commission Percentage (Alone)

Outside Column

Line 703 Total Commission Paid

Line 704 P.O.C. CommissionCommission Paid Commission

©2009 Stewart.

HUD 700 Series Example

©2009 Stewart.

Loan Charges – 800 Series

Line 801 (origination charge including YSP

Line 802 (add points; subtract YSP) –charge including YSP

and atty. doc. prep.) –Outside of Column

subtract YSP) –Outside of Column

(don’t say YSP)

Line 803 (adjusted orig. charge) – Inside Borrower’s Column

Line 804, et seq. –Inside Borrower’s

Column

Line 804, et seq. –Inside Borrower’s

C lBorrower s Column ColumnColumn

©2009 Stewart.

HUD Lines 801, 802 & 803 Example

©2009 Stewart.

HUD Lines 804 thru 808 Example

©2009 Stewart.

Items Paid in Advance – 900 Series

Lines 901 – 904 (i t t MIP

Show Charges (interest, MIP, homeowner’s

insurance)

gInside Borrower’s

Column

©2009 Stewart.

HUD 900 Series Example

©2009 Stewart.

Reserves Deposited With Lender – 1000 Series

Line 1001 (initial Lines 1002-1007 e 00 ( t adeposit) – Show

Inside Borrower’s Column

(specific deposits) –Show Outside

Borrower’s Column

©2009 Stewart.

HUD 1000 Series Example

©2009 Stewart.

Title Charges – 1100 Series

Show 1101 –Show Inside

Line 1101 –“Title Services

and Lender’s Title

Borrower’s Column Line 1101 –

Lender’s Title Insurance,

and Lender s Title Insurance” –

rollup

commitment, policy, abstract, endorsements, closing, search, g

title examination, settlement

©2009 Stewart.

Title Charges – 1100 Series

Line 1101 – Do Not Itemize

Payee not stated if

Unless Third Party Charges

settlement agent same as title company

No Mark Up of Third Party

Ch

Average Charges

Charges Treated Separately

©2009 Stewart.

Title Charges – 1100 Series

Line 1101 – No breakout if

Line 1102 – Show name outsidebreakout if

Administrative and Processing, such as

delivery, copying, wiring notary

name outside column if payee not same as Line 1101

wiring, notary, fed ex, in-house

employee Line 1102 –Settlement, escrow, , ,

closing, notary sign-up

©2009 Stewart.

Title Charges – 1100 Series

Line 1102 – Show Seller paid

Lines 1102, 1104 to 1108 – show outside

Line 1103 – Show basic Owner’sSeller paid

customary closing charge inside seller column

1108 show outside of borrower column

basic Owner s Policy in

buyer/borrower column. If seller pays for policypays for policy,

show credit on Line 204+ and debit

on line 506+

©2009 Stewart.

Title Charges – 1100 Series

Line 1103 – Either Line 1107 – Show A t’ ti f

Line 1108 – Show show extra charges

for enhanced coverage (extended,

Homeowner’s,

Agent’s portion of premium (not percentage)

Underwriter’s portion

endorsements) in Line 1103, with breakout outside column, OR show extra charge inshow extra charge in

Line 1109 in column. If no sale, shouldn’t

matter

©2009 Stewart.

Title Charges – 1100 Series

Line 1109+ –Show attorney’s

f f

Line 1109+ –Show

b ’fees for representing

seller in seller’s column

borrower’s attorney’s fees in borrower’s

column

Line 1109+ –Show attorney’s

fees for

Line 1109+ –Other charges

fees for preparing

deed/release etc. in seller’s

l

by name

©2009 Stewart.

column

HUD 1100 Series Example

©2009 Stewart.

HUD 1100 Series 3d Party Closing Example

©2009 Stewart.

Government Charges Inside Column – 1200 Series

Line 1201– Rollup tgovernment

recording charge to buyer/borrower

Line 1203 RollupLine 1203 – Rollup transfer taxes to buyer/borrower

Charges customarily/customarily/contractually

charged to seller can be shown in

©2009 Stewart.

seller’s applicable column

Government Charges Outside Borrower Column –1200 Series

Line 1202– Line 1204 – Line 1205 – StateLine 1202–Specific

government recording charge

City/County/Tax/ Stamp to buyer /

borrower

Line 1205 – State Tax/Stamps to

buyer/borrower

to buyer/borrower

Line 1206 – Other Show charges Recording and

Transfer Servicescustomarily paid

by seller in seller’s column

©2009 Stewart.

HUD 1200 Series Inside Column Example

©2009 Stewart.

HUD 1200 Series Outside Column Example

©2009 Stewart. 39

Other Charges – 1300 Series

Line 1301 – Rollup in Line 1302 + – Required

services outside column

pborrower column required services the borrower can

shop (survey, pest inspection))

Line 1302 + – Other charges of borrower/buyer

or seller inside columns (e.g. home warranties,

insurance, other inspections, taxes paid,

©2009 Stewart.

enhanced otp)

HUD 1300 Series Inside Column Example

©2009 Stewart.

HUD 1300 Series Outside Column Example

©2009 Stewart.

HUD-1HUD 1Page 3

©2009 Stewart.

HUDHUD Comparison

ChartChart

©2009 Stewart.

HUD Comparison Chart

Has 3 Comparison Charts:

Compares GFE and

HUD Charges

(1) Charges that can’t increase;

(2) Aggregate charges that can’t increase more than 10%;

(3) Charges that can change any %

©2009 Stewart.

HUD Comparison Chart

Loan Originator mustShows 0% and 10% aggregate tolerance compliance or violation

Loan Originator must identify third party

services selected by borrower and not on list

provided by Loan Originator, so not subject

to 10% tolerance limit

©2009 Stewart.

HUD Charges That Can’t Increase Example

©2009 Stewart.

HUD Chart 10% Tolerance Limit Example

©2009 Stewart.

HUD Chart 10% Tolerance Limit Example

©2009 Stewart.

HUD Chart Charges Can Change Example

©2009 Stewart.

Loan TTerms

©2009 Stewart.

HUD Loan Terms Chart

This Chart promotesThis Chart promotes borrower

understanding of loan terms and verification

th did ’t h

This chart is the substitute for the prior

proposed scriptthey didn’t change

L O i i t tLoan Originator must transmit info to closing agent to allow closer to

prepare the HUD,

©2009 Stewart.

p epa e t e U ,including last page

HUD Loan Terms

©2009 Stewart.

HUD Loan Terms

©2009 Stewart.

New Average Charge

Any settlementAverage Charge may Any settlement service provider may use Average Charge

apply to a Settlement Service (not loan amount

or value of property)

M st relate to a May not exceed totalMust relate to a Class of transactions

May not exceed total amounts paid a provider

for the services

©2009 Stewart.

New Average Charge

Class must includeClass must include period of time

(30 days to six months, keep record 3 years)

Class must include the geographic area

If use average chargeClass must include

type of loans

If use average charge, must use for all

transactions in class

©2009 Stewart.

Required Use

“Required use means a situation in which aperson’s access to some distinct service,property, discount, rebate, or other economicincentive, or the person’s ability to avoid aneconomic disincentive or penalty, is contingenteconomic disincentive or penalty, is contingentupon the person using or failing to use areferred provider of settlement services ”referred provider of settlement services.

Now Withdrawn

©2009 Stewart.

Now Withdrawn

Required Use

Settlement service providermay offer a combination of Must be optionaly

bona fide settlement services at total price lower than sum of individual market prices

(not builder)

Must be optional

Cannot be made up by higher p y gcosts elsewhere

©2009 Stewart.

(and all settlement service providers lived happily ever after)

We will have more webinars this year

happily ever after)

We will have one or more bulletins this year

We will provide an interactive HUD 1 as aWe will provide an interactive HUD-1 as a teaching tool

jgosdin@stewart com

©2009 Stewart.

jgosdin@stewart.com

dyahner@stewart.com

NEW HUD-1AIM Development Update

August 18, 2009

Jennifer Dumas, SVP Product Development PropertyInfo Corporation

jdumas@stewart comjdumas@stewart.com

©2008 Stewart.

AIM New HUD Key Dates

AFW 4.1 new HUD

AFW 6.0 new HUD HUD

RolloutOctober

2009

HUDRollout

August 2009

AIM+ new HUD-1Rollout

©2009 Stewart.

RolloutSeptember

2009

AFW Title Insurance Screens

©2009 Stewart.

AIM+ Title Insurance Screens

©2009 Stewart.

AIM New HUD Training

AFW new HUDMonthly

AFW new HUD electronicMonthly

WebinarsSeptember 2009

electronic tutorials

November 2009

AIM+ new HUDMonthly AIM+ new HUD

electronicWebinars beginning

September 2009

electronic tutorials

October 2009

©2009 Stewart.

Customer Care – (877) 800-3132

2. Click on Downloads

1. Go to lifeline.propertyinfo.com

3. Click on New HUD Format

©2009 Stewart.

Q ti ?Questions?jdumas@stewart comjdumas@stewart.com

Customer Care – (877) 800-3132

©2009 Stewart.Customer Care – (877) 800-3132