MortgageDocs Blog

HUD-1 Settlement Statement

The HUD-1 Settlement Statement is a statement of fees and adjustments to be given to the parties in connection with the settlement.

View line #303 towards the bottom of the first page to check if funds are due from or to borrower. Typically in a purchase closing funds are due from the borrower (called short to close). In other cases where the borrower’s initial deposit exceeds the obligations in the transaction, funds are owed to the borrower. The lender will mark the applicable field with an “X” or other character and input the amount due (if any) in the box directly to the right.

If funds are due from the borrower:

Politely ask the borrower for a check to enclose in the return package and point to the amount due shown at line #303. Use a paper clip to secure the check to the top of the docs, so it’s safe when the package is opened by the lender or title company.

Often times the client will require a cashier’s check from the borrower, but in rare cases the payment may be in the form of a personal check up to a certain amount pre-set by the lender (usually max of $1000). View the Lender’s Instructions to verify, but if none are mentioned, call the lender for instruction (contact us if you’re unable to reach the lender). Send an update through SignSTAT post-signing with the details.

EXAMPLE:

The example below shows the borrower is short to close and therefore a cashier’s check in the amount of $5,450.50 is due at the loan signing.

Click here to view the full 2 page document (may take a couple seconds to load).

Common Loan Document Forms

Since the introduction of our blog we’ve provided detailed instructions and examples of documents contained in most loan packages. We hope this info has helped educate new notaries and refresh seasoned ones. Here’s a summary and link for the documents posted so far:

• Borrower’s Signature/Name Affidavit — Borrower must sign pre-printed name variations and may add AKA names not already listed.
• Uniform Residential Loan Application (1003 form) — Make sure to examine the document thoroughly as there are normally multiple signature and initial lines that must be completed.
• Request for Transcript of Tax Return (4506-T form) — The spouse must also sign for joint tax returns.
• Request for Taxpayer Identification Number and Certification (W-9 form) — Be careful not to miss the borrower’s signature line that’s located in the middle of the page.
• Notice of Right to Cancel (NRTC) — The Opening and Rescission dates must be filled in on the bank and borrower copies.
• Letter of Explanation (LOE) — Borrower’s explanation to the lender about a particular event.

We’ll continue to post more examples and expand on the loan package. But feel free to respond anytime with requests that may need immediate attention.

Notice of Right to Cancel: Borrower Copies

In continuation of earlier Notary Right to Cancel (NRTC) topics, we wanted to add another critical piece to the signing. In addition to filling in the Opening and Rescission dates on the bank copy, it’s extremely important to complete the dates on the borrower copies. After the loan signing, the borrowers can reference their NRTC copy to be reminded of their right to rescind the loan and within the designated time frame.

The following example of the NRTC form highlights the dates to be filled in and where the borrower initials (in some cases the lender may require the borrower to sign, which should be indicated by the word “signature” instead of “initials”):

The I Wish to Cancel section must remain blank (free from any writing) unless the borrower wants to use the NRTC form at the signing to cancel the loan. If the borrower signs or there’s any type of writing in this area by mistake, call the client immediately for instruction on how to proceed. Most lenders will allow you to switch the bank copy with the borrower’s copy, so the cancellation section is 100% clean.

For help with rescission dates, see How to Calculate the Rescission Period.

Borrower’s Signature/Name Affidavit

Often times the lender will include an affidavit for the borrower to certify he or she is known by other names. The form comes in a variety of titles such as Signature/Name Affidavit, One and the Same Name Affidavit, Name Affidavit and AKA Statement, Same Name Affidavit, Signature and Name Certification, and many more.

Normally when a lender includes a name affidavit in the paperwork the lender will pre-fill the name variations that are required for the loan. The borrower is free to add any other names that are not already listed. Here’s an example of how to complete a sample form starting with the borrower’s signatures to the notarization at the bottom (Note: Sara Lee is a fictitious notary used for this example) :

Be sure to double-check the space below the AKA names is complete where it reads, “and that _____________ are one and the same person”. This section may be completed in 2 ways:

(1) You may follow the example above (displayed as close-up image below) by indicating all of the names are for the same person:

or (2) You may print each name variation like the example below:

ADDITIONAL EXAMPLES:

Since the verbiage may differ between forms, we’ve provided 2 additional examples:

Example 1:

Example 2:

Request for Transcript of Tax Return (4506-T form)

Here are sections to remember when completing the 4506-T form:

PAGE 1:

1. The borrower signs and dates near the bottom of the page.

2. If the borrower is married, be sure the spouse signs and dates below the borrower’s signature.

PAGE 2:

Sometimes a lender will print initial lines at the bottom of the page, or give instruction on the file to add them to the document. If this is the case, please make sure the borrower initials where required. The borrower’s spouse will also initial if the borrower is married.

Click here to see the full 2 page document (may take a couple seconds to load).