Friday, September 23, 2005

Found the HUD error!

As I said before, there is always a mistake on the HUD settlement form - it's just a question of finding it. I originally thought this time was a rare exception, but it turns out I was wrong. There is a mistake.

A friend brought to my attention the fact that the $26 for four days of property taxes figure I gave seemed a bit high. Turns out, he was right and I made a calculation error. The actual amount is about $12 for four days. But in reviewing this, I discovered the HUD statement had me overpaying my taxes by $1. They listed the first half of the year's taxes at $561.31 instead of $560.31. OK, it's only a dollar difference, but still. I can stand by my claim that the HUD statement always contains errors! :-)


Trisha#1 said...

Ok, Shaun, you're getting a little intense about the miscalculation on the HUD. ;-) But, I'm sure your theory is correct....

jim said...

Who is responsible for discovering that error?

My HUD had a mistake in that they weren't crediting me with a Maryland first time homebuyer credit (half of the transfer taxes) so it would've been a ~$800 mistake.

Anonymous said...

what's a HUD statement?

Shaun said...

Trisha - Well, Friday was my day off between jobs, so I had nothing better to do :-)

Jim - The buyer and seller are responsible for going over the HUD and making sure everything is correct. If you are using an agent, they should go over it with you. If they don't offer to, ask.

Anon - A HUD settlement statement is a two or three page document that is standard in real estate transactions. It lists all dollar amounts involved in the transaction in two columns - one side is the buyer and one side is the seller. In a perfect world, your sales contract is the document that drives the sales. However, in actuality, the HUD statement is the document that everything is really keyed off of. This means it is important to make sure all the details of the contract were transferred to the HUD statement correctly. The HUD also includes specific dollars amounts for things referred to in general terms on the contract. For example, the contract may state "Seller is responsible for all property taxes up to the close of escrow." But the HUD statement will show those taxes as a dollar amount. (The escrow company contacts the county tax office and figures out the amount for you.) Also included are the agent commission amounts, which are not in the sales contract, but in your listing contract with the agent. It basically boils the 9+ page sales contract down to 2 pages of figures.

Mark said...

Hey Shaun, Mark in Gilbert. I still have not closed on my home. Every day it seems the Mortgage Broker or Country Wide lender in Cali (buyers residence) comes up with a new need or contingency. The latest being the termite inspector didn't actually do an inspection because he says I have too much decorative rock up against the stem wall. I shoveled it away. He will be out Monday again and supposedly we close by Tuesday. My initial close was Aug 25th. I'm becoming very unhappy.
I attempted to purchase HUD once and almost lost my deposite because the 17 year HUD veteran Realtor knowing I was buying an investment property didn't tell me about the absense of flooring in the Master Bedroom being a health hazard. Therefore for HUD it has to be a primary residence for at least 1 year to get their discount. The HUD gal stated he should have known and decided to give us our $1000 back.
I thought HUDs weren't a good deal anymore?

Shaun said...

Mark - Wow.. Talk about a delayed closing! I'd be pissed. I would tell the buyer they are in default of the contract for not making the original close of escrow date. Of course, if the delays were your fault, I wouldn't say anything :-) But I have to say, that's a pretty ticky tack thing for the terminte inspector to say. He could inspect the rest of the property and just make a note of that one item. They've done that for me before.

In this post, I'm referring to the HUD settlement statement, not an actual HUD purchase. Even though it's not a HUD home, the HUD statement has become very almost the defacto standard in real estate transactions, simply because it's a form the government requires. Seems like everyone in the banking industry decided to standardize on that. I've never bought a HUD home, so I have no experience working with them.

Anonymous said...

i've purchase 10 homes in the past 4 years. i've never seen a HUD-1 that didn't have errors in it.[to be truthful i stopped looking for minute $1 errors but i'm sure they exist].

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