Exercise 8B: Settlement Preparation and Computation of the ...



Exercise 8B: Settlement Preparation and Computation of the Settlement Statement

The preparation and calculation of the Settlement Statement signifies the impending transfer. Two fact patterns are provided.

Calculate the standard HUD-1 Settlement Statement with net amounts of cash to and from borrowers and sellers noted.

FACT PATTERN #1

Type of Loan: Conventional

Name and Address of Borrower: John and Fredericka Rumbaugh, 18 Genner Street, Hickory Station, MD 22214

Name and Address of Seller: Estate of Anna M. Rupnik, 402 E. Dickson Street, Washington, DC 20756

Name and Address of Lender: First National Bank of New York, 1819 South Wayside Street, Washington, DC 20786

Property Location: 402 E. Dickson Street, Washington, DC 20756

Settlement Agent: American Title Insurance Co., 1418 E. 29th Street, NW, Washington, DC 20666

Contract Sales Price: $89,900

Deposit : $1,000

Commission: 5% = $4,495

Realtor: Hatteras Realty

Loan Origination Fee: 1% = $750

Loan Discount: 2% = $1,500

Credit Report: $75 (paid outside of closing)

Lender’s Inspection Fee: $100

Tax Service Fee: $35

Document Preparation Fee: $10

Date of Settlement: February 2, 2004

Interest from 1-19-95 to 2-1-95: 20.83/ day = 270.79

Mortgage Insurance Premium: 12 months = $375

Reserve Taxes: 8 months at $125/ month = $1,000

Reserve Mortgage Insurance: 2 months at $27.50/ month = $55

Title Insurance Binder: $10

Notary Fees: $10

Attorney’s Fees: $600

Title Insurance: $305

Recording Fees: $48

Releases: $3 (Seller)

State Tax Stamps: $414

State Transfer Tax: $324.50 (paid from borrower’s funds only)

Survey: $195

Federal Express Charges: $50

Appraisal Fee: $200 (paid outside of closing)

FACT PATTERN #2

Settlement Agent: Marie F. Johnson, Attorney at Law, 1814 King Street, Salisbury, KY 44431

Type of Loan: Conventional

Name of Borrower: Michael Kretzler, 945 Palm Street, Dorman, LA 56432

Property Location: 3752 State Street, Cannon, KY 44823

Name of Seller: Johnny LaRue

Settlement Agent: same

Name of Lender: Great Savings Bank of America, 457 W. Main Street, McDonald, PA 15046

Place of Settlement: Settlement Agent

Date of Settlement: January 31, 2004

Contract Sales Price: $59,000

Earnest Money Deposit: $2,000

Real Estate Commission: 7%; split equally; totaling $4,130

Loan Origination Fee: 2 ¼ points = $1,215

Credit Report: $27

Interest from 1/31 to 2/1: $14.62/ day = $14.62

Mortgage Insurance Premium: 12 months = $540

Hazard Insurance: 1 year = $217

Reserve Hazard Insurance: 2 months at 18.08/ month = $36.16

Mortgage Insurance: 2 months at 15.30/ month = $30.60

County Property Taxes: 6 months at $31.22 = $187.32

Title Insurance Binder: $10

Attorney’s Fees: $350

Title Insurance: $133

Recording Fees: $67.50

Releases: $8.50 (by borrower)

State Transfer Tax: $1180 (split equally)

Survey: $120

Pest Inspection: $15

Sewer Assessment: $37 (by buyer)

Seller’s Home Equity Line Payoff: $9,884.60

Second Equity Line: $9,754.80

Sewer Assessment: $3.14 from 1/31 to 2/1/2004

Prepayment Fee for Early Mortgage

Satisfaction: $528.54 (imposed on seller)

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