RESPA and the HUD-1: A New Chapter

Calendar year 2010 was a year for change for residential real estate closings. The Department of Housing and Urban Development ("HUD") implemented new changes in RESPA, the Federal Reserve introduced a new Truth-in-Lending disclosure form and a new HUD-1 Settlement Sheet and Good Faith Estimate made its way into our transactions. Throughout most of 2010 and 2011, the real estate industry adjusted to these new changes, forms and rules; for the most part, the adjustment went smoothly.

However, as 2011 drew to a close and the implications of the Dodd-Frank Act started to come to the fore, a new wave of change arrived. HUD is no longer charged with implementing and overseeing RESPA; that duty was transferred to the newly-created Consumer Finance Protection Bureau (CFPB). One of the charges that the CFPB is required to accomplish is to combine the HUD-1 Settlement Sheet with the Truth-in-Lending ("TIL") Disclosure. This is no small task. Those of you familiar with residential real estate settlements understand that the TIL is one of the least-understood forms reviewed at settlement . The two forms -- the HUD-1 and the TIL -- provide essential information to consumers. The TIL discloses the true costs of the loan, whether there are pre-payment penalties or balloon payments, and whether the note contains a demand feature. (Experience suggests that the only information most consumers understand is the pre-payment and balloon payment disclosures.) The HUD-1 identifies the source and destination of the loan proceeds. It acts as a balance sheet so that lenders, regulators and consumers can identify the source of the money (federally related mortgage money or consumer paid money), who got paid what amounts, and whether payments were made at closing or outside of closing.

Combining these two separate disclosures into one form that an average consumer can comprehend is no small task. Currently, the CFPB is working with two prototypes, one the closely resembles the current HUD-1 and one that is a completely original form. While this (current) round of comments has closed, all real estate practitioners (or at least settlement service providers) are encouraged to monitor these forms as they evolve. The forms can be viewed at the CFPB website located at:

Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline. He may be reached at