It's the No. 1 complaint that real estate agents make about the home mortgage lending process. And it bugs their home buyer clients as well: The failure of settlement or escrow officials to provide a copy of the final settlement sheet before the closing.

In a new nationwide survey of real estate agents, 50 percent said their biggest gripe was the absence of HUD-1 closing documents for review a day ahead of the settlement. The HUD-1 is the form that lists settlement charges. Real estate agents told pollsters that although "required by government regulations," settlement sheets rarely arrive in advance, thereby denying home buyers an opportunity to see an itemized list of all their charges and fees.

"I have yet to see a HUD statement prior to a client's closing," one agent said, according to the survey. "It would be nice for [home buyers] to have it in hand at least two days prior to closing, if for no other reason than to let them know what funds they need [for] settlement."

Another complained that when buyers go to closing with no advance copy of the HUD-1, even if requested, "closing costs are different from the original quote given to the buyer -- sometimes by over $1,000."

The study was sponsored by a lending industry newsletter, Inside Mortgage Finance, and conducted by market researchers Campbell Communications and Geosegment Systems Inc. A statistically representative sample of 1,780 real estate agents participated in the polling; the survey has a 3 percent margin of error.

Tom Popik, a principal of Geosegment Systems, said the findings are "really rather shocking."

He said, "In what other major consumer purchase do you [not] get information about the final costs and fees until the last minute? How often do people buy a car and not be told the final, bottom-line costs ahead of time?"

The survey also focuses attention on when closing agents must provide a copy of the HUD-1 settlement sheet -- if indeed ever, under current federal rules. Here are the facts:

Although real estate agents and consumers may believe that federal rules guarantee them the right to see the final closing numbers a day ahead of settlement, that's not completely accurate. Washington lawyer Phillip L. Schulman of Kirkpatrick & Lockhart Nicholson Graham LLP, an expert on federal real estate regulations, said in an interview that the law requires a closing agent to provide a borrower the HUD-1 figures one business day in advance only "if the borrower requests" such a review. Equally important, said Schulman, the closing agent is only required to "provide whatever figures [the agent] actually has received up until that time" from other parties involved in the transaction.

"The fact is that some of these numbers come in very late in the process," just hours or even minutes before the scheduled settlement, Schulman said.

Another widely misunderstood point: The federal agency that regulates real estate settlement procedures has no enforcement powers when closing agents fail to provide advance copies of the HUD-1 to consumers who request them.

Ivy Jackson, who heads the Department of Housing and Urban Development's investigation unit on settlement complaints, said that "we simply do not have the authority" under current federal law to penalize any firm that ignores consumers' requests to review settlement information in advance.

Richard Fritz, a lawyer and title agent with Paragon Title & Escrow Co. of Bethesda, said one reason HUD-1 sheets often are not completed 24 hours in advance is that "we often have to wait for the borrower's lender to come through" with key information about fees and detailed closing instructions.

Sometimes other parties delay sending information needed for the HUD-1, such as local government agencies (property tax information), condominium or home owner associations (annual fees that affect escrow numbers), and even the home buyer's real estate agent (sales contract details).

"We are always willing to let borrowers see whatever we have received" 24 hours in advance, Fritz said. "But what we obviously can't show them is what we haven't received" -- which may be substantial.

Fritz said his firm soon will allow all parties to a transaction to inspect files online through a password-enabled, secure Web site. Meanwhile, HUD is expected to unveil regulatory proposals soon that would require settlement documents to closely track upfront "good faith estimates." Under current rules, final closing numbers can be far off the mark from the upfront estimates, a loophole that sometimes allows unethical loan officers to pull in mortgage shoppers with lowballed quotes on fees.

Under HUD's forthcoming proposals, good faith estimates on settlement charges would be required to come with a lot more good faith -- if not ironclad guarantees.

It is the loan officers ethical duty to go over the settlement statement with their borrower prior to closing so there are no surprises.

We usually get it about 1-2 hours prior to closing. Every once in a while it'll be to us 4-5 hours prior but NEVER a day or two. This is one of the glitches in the process that nobody seems to have a reason for... it's "just the way it is".

""I have yet to see a HUD statement prior to a client's closing," one agent said, according to the survey. "It would be nice for [home buyers] to have it in hand at least two days prior to closing, if for no other reason than to let them know what funds they need [for] settlement."
"

Wow... I have yet to NOT see a HUD statement in advance. Well, I did once have a nightmare lender that a buyer insisted on using, and she was shocked at the closing table (despite my predictions of her fees which were dead on.)
---A

We can estimate a lot, but the final, official document comes from the closing attorney. Often, the attorney doesn't get the closing package until the day of closing. So, everything we look at prior is still an estimate.

Several times I have had to wait until the hour before closing to call customers, sitting at the bank, waiting for me to tell them how much to make the certified check out for! Then we meet 15 minutes before to go through the HUD. For the delay there are always excuses too. Last time the lender blamed the customer for not providing a receipt for a large deposit but the customer said if he was told the week before he would have brought it sooner. He was a first time homebuyer so had no clue and was irritated that they were pointing the finger at him for the delay. I trusted the lender to ask the right questions. At the final hour it is usually lack of communication. Someone not receiving vital information.

As a new agent, this brings up a question for mortgage brokers: Why is there not more communication at the first meeting with the borrower about the process? It seems to me that mortgage brokers assume that everyone understands the process and what will be needed. Now that I understand the process better, I will be educating the borrower(s), but I still think the mortgage broker should be doing it as well.

For instance, they should tell the borrowers what will be expected in terms of reserves, seasoned funds, and not to make any major purchases before recording!!!!

I don't have much experience, but in every one of my transactions (business and personal) to date, there has been some kind of drama at the end that appears could have been avoided by either more communication or more information provided earlier.

I can only assume that perhaps mortgage brokers have no leverage with their lenders and the lenders jerk them around at the end? Just a wild guess - but when the lenders won't return phone calls or the "underwriter" is "thinking" and can't be rushed, what can be done? It seems like the lenders don't have much concern for closing dates and what might happen if the loan does not close on time (in terms of being out-of-contract). Where is the accountabilty of the lenders?

Clearly this guy has never been to a hospital. That's the only racket I know where you agree to pay their charges and you don't know what the cost is until AFTER it's all over. At least with buying a car or a house you know the total cost before you comit to the transaction, with a hospital stay you go in and they send you a bill afterward.

I have two local lenders that actually get the final closing figures in time for title to get me the HUD1 on average 1-2 days before close. They are the only ones as they do not initially sell their loans. They are a dream to work with and can get me to a closing table in less than 10 days.
Sometimes the smaller local guys offer the best service.

It is not the realtors place to go over the HUD with the borrower as this would be the mortgage brokers responsibility. As mortgage brokers we handle the financial aspect of the transaction, settlement statement included.

It sounds to me like the majority of you have not chosen your loan officers wisely.

In their defense AZ, sometimes agents don't get to choose who the lender is. On that note, I just want to say that I just typed this very detailed reply, lost connection, and lost the entire post. I AM SO MAD! I will repost it but right now, I need to walk away from this darn computer!!!

You're somewat right. I think I can speak for all realtors when I say we like to review the HUD well enough in advance in case there is a problem with our commission. I've had that happen many times.

The HUD isn't necessarily all mortgage related either. I like to review the inspectors fees (if they are getting paid at closing), any moneies credited back to the buyer/seller, money escrowed for repairs etc. So, yes, the bulk of it should be gone over by the LO but the realtor has a vested interest in it too.

Futhermore, I have noticed LOTS of junk fees on a HUD by the mtg broker & have had to get on the phone during a closing and argue with the mtg company because the fees are higher than the buyer expected.

"Futhermore, I have noticed LOTS of junk fees on a HUD by the mtg broker & have had to get on the phone during a closing and argue with the mtg company because the fees are higher than the buyer expected."


Not your place. We do not scrutinize your commission and what you may consider a "junk fee" is more than likely valid. 99.9% of the HUD is Mortgage related.

Just out of curiosity, what do you as a non-mortgage professional consider "junk fees?"

I consider it a junk fee if it wasn't disclosed prior to closing. I never see these with the banks, ie/ Bank of America, Homebanc, etc. but almost always see it when a loan is handled through a mortgage broker. Like Tanya, we get on the phone immediately with the lender and 99% of the time we see $100s and recently even over $1K waived(sometimes that is at the closing table because the HUD has to be sent directly to the closing due to cutting it too close). These extra fees just mysteriously appear at the very end.

BTW, AZLender, I'd like to believe we can work together. We need each other and we need to support each other. And, I may be wrong here but, I think Lenders need us more than we need them. We send MANY people to lenders, we've only had one referral back our way.