The Difference Between HUD-1 & HUD-1A

At the closing of a house sale, the settlement agent prepares a statement listing all the charges and apportionments to be made between the buyer and the seller. The U.S. Department of Housing and Urban Development (HUD) prescribes the form of settlement statement. This is known as HUD 1. HUD 1A is an optional form used in transactions without a seller, such as a refinancing.

The settlement statement is an itemized list of all credits and fees imposed on the buyer/borrower and the seller in connection with the transfer of real estate. It is also used to list the costs and charges associated with taking out a loan when a homeowner refinances his property. The HUD 1 or 1A is typically prepared by a settlement agent who will deliver the completed form at, or immediately prior to closing.

The aim of the HUD is to accurately represent the settlement costs related to the real estate transaction. The form comprises two columns of costs -- fees and charges -- split into groups for the buyer and the seller. Costs headings include such matters as the agents' commissions, title-related charges, attorney fees, survey and home inspection fees, and the buyer's loan-related fees. These numbers are added up to give a final amount due from the buyer at closing, and the net sales proceeds due to the seller.

Both HUD forms are split into sections. Sections A to I contain factual details such as the names and addresses of the parties and the subject property, and the date and place of settlement. These sections are substantially the same on both forms, although the HUD 1A does not allocate section letters to the information. Section L is also substantially the same across both forms. This section relates to loan costs and lists the settlement charges required in connection with the loan, such as appraisal and flood certification fees, title charges, advance mortgage and homeowners insurance premiums due, and government recording charges.

As the HUD 1A form is used in refinancing transactions, its principle section is L, pertaining to the loan. The HUD 1 form is longer by about a page. The additional sections in HUD 1 relate to the sale transaction. Section J contains a summary of the buyer's transaction costs, such as the contract sales price, deposits paid and adjustments for items that the seller has to pay for, or has paid in advance, such as property taxes and assessments. Section K is similar to section J, but from the seller's perspective. These sections culminate in a gross amount due to/from the seller/buyer which does not feature in HUD 1A.