Wednesday, December 23, 2009

HUD-1 as a GFE "Tie-in"

(This is Day 4 of 12 in a series called "The 12 Days of RESPA Reform" which will run until December 31st. For a full list of RESPA topics, check here.)

One of the important components of the new HUD-1 Settlement Statement is a "tie-in" to the lender-issued Good Faith Estimate (GFE).

The vision: A borrower sitting at the closing table with the GFE on the left and the HUD-1 on the right, going from one to the other making sure they line up. The new HUD-1 even has the appropriate GFE column number (see figure above) to help with this. Ideally, all figures match identically. More likely the HUD-1 figures will be equal to or less than those on the GFE, and must be unless they fall within a set tolerance or the vendor was selected by the borrower (more on both in a subsequent post).

Time will tell whether this does in fact create a better, more transparent experience for the borrower, or whether this just adds more time to an already lengthy, document-intensive process.