The HUD-1 settlement statement is the three-page form, created by the Department of Housing and Urban Development under the Real Estate Settlement Procedures Act of 1974, that itemizes every charge paid by the buyer and seller in a residential real estate closing. For most mortgage transactions it was replaced on October 3, 2015 by the Closing Disclosure, but it is still used today for reverse mortgages and certain charitable loans, and it sometimes appears voluntarily in all-cash closings.
What the HUD-1 Shows on Each Page
The form is divided into three pages, and each one answers a different question.
Page one is the summary. Section J tracks the borrower’s side of the deal and Section K tracks the seller’s. Each column shows the contract sales price, adjustments for prepaid or unpaid items such as property taxes, and a bottom-line figure for cash due to or from that party.1Consumer Financial Protection Bureau. Appendix A to Part 1024
Page two is where the fees live. Section L breaks every settlement charge into numbered series:
- 700 series: real estate broker commissions.
- 800 series: loan origination charges, including the lender’s origination fee, any discount points, and the adjusted origination total.
- 900 series: items the lender requires at settlement, such as per-diem interest, mortgage insurance premiums, and homeowner’s insurance.
- 1000 series: escrow reserves collected for future tax and insurance payments.
- 1100 series: title charges, covering the title search, lender’s and owner’s title insurance, settlement or closing fees, and related attorney costs.
- 1200 series: government recording fees and transfer taxes.
- 1300 series: additional third-party charges such as inspections and surveys.
Line 1400 tallies all settlement charges for both parties.2Legal Information Institute. Appendix A to 12 CFR Part 1024
Page three, added after HUD’s 2008 rule changes, puts the Good Faith Estimate numbers next to the actual HUD-1 charges in a comparison chart, with charges grouped into three tolerance buckets. The same page restates basic loan terms, giving the borrower one last snapshot before signing.1Consumer Financial Protection Bureau. Appendix A to Part 1024
Two notations deserve attention. Any charge paid before closing by the borrower, seller, or anyone else is marked “P.O.C.” (Paid Outside of Closing) and left out of the column totals. In a “no cost” loan, third-party fees still appear on the form but are offset by a negative adjusted origination charge.2Legal Information Institute. Appendix A to 12 CFR Part 1024
The HUD-1A Variant
Refinances and other transactions without a seller use a shorter form called the HUD-1A. It drops the 700-series commission lines and adds two sections the full HUD-1 does not have: Section M, which lists payees receiving loan proceeds at settlement (existing lenders being paid off, contractors, other creditors), and Section N, which calculates the net amount disbursed to the borrower. The HUD-1A cannot be used whenever a seller is part of the deal.3Consumer Financial Protection Bureau. Appendix A to Part 1024 – HUD-1A Instructions4Legal Information Institute. Appendix A to 12 CFR Part 1024 – HUD-1A
How Charges Were Checked Against the Good Faith Estimate
The tolerance system on page three is one of the HUD-1’s more consumer-protective features. Three categories govern how far final charges can drift from the GFE estimates:
- Zero tolerance: the origination charge, any interest-rate credit or charge while the rate was locked, the adjusted origination charge, and transfer taxes cannot increase at all.
- 10 percent aggregate tolerance: certain lender-required services, government recording charges, and title services chosen from a lender-identified provider list cannot increase by more than 10 percent of the estimated total when added together.
- No limit: all other charges can change freely.
If the final HUD-1 shows charges exceeding the permitted tolerance, the loan originator has 30 calendar days after settlement to reimburse the borrower for the excess and issue an amended HUD-1.5Consumer Financial Protection Bureau. 12 CFR § 1024.7 – Good Faith Estimate Title services and lender’s title insurance, grouped together in Block 4 of the GFE, carry the highest compliance risk because the estimate must capture every ancillary cost, from document preparation to courier fees, even when paid to different providers.6Consumer Compliance Outlook. RESPA Changes to Good Faith Estimate Form
Who Prepares It and Who Pays for Mistakes
The settlement agent prepares the HUD-1 and makes it available at or before closing. Depending on local practice, that agent is a title company representative, an escrow officer, or a closing attorney. By signing, the settlement agent certifies that the information is accurate and that funds will be disbursed as stated.7First Title SA. Understanding the HUD-1 Settlement Statement The borrower also has a statutory right to inspect known items on the business day before settlement.8Office of the Law Revision Counsel. 12 U.S.C. § 2603
When a tolerance violation surfaces, the reimbursement obligation sits with the loan originator, not the settlement agent. The originator can direct the settlement agent or another third party to deliver the money, but the legal responsibility stays with the originator.9Consumer Compliance Outlook. RESPA After the cure, the settlement agent issues an amended HUD-1 and distributes copies to the borrower, the seller, and the originator.
When You Still Receive a HUD-1 Today
Most borrowers closing a residential mortgage in 2015 or later receive the Closing Disclosure, not the HUD-1. The older form still applies in a few situations:
- Reverse mortgages. Borrowers in these transactions receive a HUD-1 or HUD-1A.
- Charitable mortgage loans. Under a 2021 law (Pub. L. 116-342), a tax-exempt organization described in Section 501(c)(3) of the Internal Revenue Code may use the HUD-1 and GFE for a mortgage loan offered at 0 percent interest primarily for charitable purposes.10Office of the Law Revision Counsel. 12 U.S.C. § 2603(d)
- All-cash purchases. There is no prohibition on using the HUD-1 voluntarily, and it sometimes appears in closings that involve no lender at all.1Consumer Financial Protection Bureau. Appendix A to Part 1024
Home equity lines of credit, manufactured housing loans not secured by real estate, and certain subordinate homebuyer assistance loans are exempt from the Closing Disclosure requirement, but they receive Truth in Lending disclosures rather than a HUD-1.11Consumer Financial Protection Bureau. What Is a HUD-1 Settlement Statement? If you are closing a HELOC, do not expect either form.
Why the HUD-1 Was Replaced by the Closing Disclosure
Mortgage rates and settlement fees used to be disclosed in two separate calculations under two separate statutes, which prevented borrowers from seeing a unified picture of credit costs. Congress tried to fix this in the 1996 Economic Growth and Regulatory Paperwork Reduction Act, but HUD and the Federal Reserve concluded that merging the TILA and RESPA frameworks required new legislation.12Congressional Research Service (EveryCRSReport). Mortgage Disclosure Improvement
That legislation was the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which transferred RESPA rulemaking authority from HUD to the Consumer Financial Protection Bureau and directed the CFPB to create a “single, integrated disclosure.”13RegInfo.gov. TILA-RESPA Integrated Disclosure Final Rule The CFPB’s November 2013 final rule collapsed four legacy forms into two. The Good Faith Estimate and the initial Truth in Lending disclosure became the Loan Estimate, issued shortly after application. The HUD-1 and the final Truth in Lending disclosure became the Closing Disclosure, a five-page form covering loan amount, interest rate, monthly payment, and all costs at closing.14FHA.com. HUD-1 Settlement Statement
Compliance became mandatory on October 3, 2015, after the original August 1 deadline was pushed back for a procedural reason under the Congressional Review Act.15Congressional Research Service (EveryCRSReport). TILA-RESPA Integrated Disclosure Rule Lenders must now deliver the Closing Disclosure at least three business days before the scheduled closing.16Consumer Financial Protection Bureau. Closing Disclosure Explainer
How the HUD-1 Relates to the ALTA Settlement Statement
When the TILA-RESPA Integrated Disclosure rule took effect, the American Land Title Association developed its own set of standardized settlement statements to work alongside the federal Closing Disclosure. The ALTA settlement statement is not federally required, but it has become standard practice in the title industry.17Redfin. Settlement Statement vs. Closing Disclosure
The reason both documents often show up at the same closing is that the Closing Disclosure focuses on the borrower’s loan terms and costs, while the ALTA statement is a complete ledger of debits and credits for buyer and seller alike. The ALTA form captures items the CD does not always display, including disbursement and recording dates, actual title insurance premiums (the CD uses a mandatory calculation method that can produce inaccurate premium figures), and state- or county-specific fees.18NetSheetCalc. ALTA Statement and Closing Disclosure When both documents are used in the same transaction, total figures such as cash-to-close and closing costs must match exactly; if they do not, the closing agent is required to correct the discrepancy.17Redfin. Settlement Statement vs. Closing Disclosure
Practices vary by state. In escrow states such as California, Washington, and Arizona, the buyer and seller each receive an ALTA settlement statement alongside the buyer’s Closing Disclosure. In attorney-closing states such as New York and Massachusetts, a real estate attorney supervises the process and distributes the documents. In all-cash transactions where no lender is involved, the ALTA settlement statement often serves as the primary financial record.17Redfin. Settlement Statement vs. Closing Disclosure
Some states add their own disclosures on top. Texas, for example, requires a separate “Texas Disclosure” whenever a Closing Disclosure is used, developed by the Texas Department of Insurance to capture state-specific items that cannot fit on the federal CD. State auditors require both the signed Texas Disclosure and the Closing Disclosure to be present in every transaction file, and if the lender uses a different settlement statement, the title agent must use a form approved under Texas law or regulation.19Texas Land Title Association. Settlement Statement Guidance If you are closing in a state with its own supplemental form, expect to sign more than just the federal disclosure.