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Allowable Closing Costs Paid by HUD Single Family Property Disposition

 
Click Here or type Alt-k for MS Word version of this Notice
 
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D.C. 20410-8000
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
Special Attention of:
 
All Homeownership Center Directors              Notice :  H  2005-12
All REO Division Directors
All Real Estate Owned Branch Chiefs             Issued:  May 27, 2005
All Management and Marketing Contractors        Expires:   May 31, 2006
All HUD Contract Closing Agents
 
                                                Cross References:
 
Subject:  Allowable Closing Costs Paid by HUD Single Family Property
          Disposition
 
     This Notice supersedes Notice H 2004-05 , which identified
allowable closing costs paid in connection with the sale of a
HUD-owned single-family property.  The effective date of this Notice
is 30 days from the date of issuance.  The allowable closing costs
identified below will be in effect for sales contracts executed on or
after the effective date of this Notice.  Sales contracts executed
prior to the effective date will be held to the allowable closing
costs identified by Notice H 2004-05.
 
     In an effort to ensure that purchasers, real estate brokers
and/or sales agents, HUD's management and marketing contractors, and
HUD's contracted closing agents are provided with consistent
information, the following list distinguishes closing costs that are
automatically paid by HUD and those which may be paid if amounts are
indicated on Lines 5 and/or 6a and 6b of the Sales Contract.
 
Closing costs automatically paid by HUD
 
* Proration of property taxes and
any special assessments such as
Homeowner's Association (HOA)
fees and utility bills
 
* Condominium or HOA Transfer Fee,
if applicable
 
* Cost to provide condominium
documents to purchaser
 
* Repair Escrow Fee of $200
where applicable
 
_____________________________________________________________________
HSIP:   Distribution:  W-3-1, W-2(OGC)(H)(Z), W-3(A)(H)(ZAOO), W-4(H),
R-1, R-2, R-3, R-3-1(H)(RC), R-3-2,
R-3-3, R-6, R-6-1, R-6-2, R-7, R-7-1, R-7-2, R-8, R-8-1
 
* Settlement or Closing Agent Fee       The Department will only pay HUD's
                                        contracted closing agent. This is the
                                        purchaser's cost if another agent is
                                        chosen.
 
* Recording Fees                        HUD will automatically pay recording
                                        fees and charges for the deed only
                                        (i.e., nominal amount charged per page
                                        for recordation).
 
Closing costs that may be paid by HUD
 
     Purchasers may specify a dollar amount on Line 5 of form
HUD-9548, Sales Contract that they expect the Department to pay
towards their financing and closing costs.  Homeownership Center Real
Estate Owned Directors have the flexibility to prescribe the maximum
amount of the closing costs that HUD will pay on line 5, which may
range from three to five percent of the purchase price.  That
guidance will be communicated to the Management and Marketing (M&M)
contractors by their Government Technical Representative (GTR).  Any
changes to these amounts will be identified on the M&M contractor's
website.  HUD will pay the lesser of the amount requested in Line 5
or the actual costs of the items specified.  Any funds remaining
after the allowable closing costs have been paid will not be credited
to the purchaser(s) at sales closing.
 
Sales commission for the selling broker will be paid by HUD only if
indicated on Line 6a of
form HUD-9548, Sales Contract.
 
     The following list represents the complete list of additional
allowable closing costs that may be paid by HUD at sales closing if
there are sufficient funds on Line 5 of form HUD-9548, Sales
Contract, to cover the expenses:
 
* Appraisal Fee                    HUD will pay for the Appraisal
                                   on an FHA 203(k) loan that is
                                   necessary to determine the
                                   "after rehab" value.
 
HUD will pay for a new appraisal if the previous appraisal expired
prior to the execution of form HUD 9548, Sales Contract.
 
* Credit report                    Up to $20
 
* Flood Certification              If the property is being
                                   offered with FHA insurance
                                   and is in a flood plain, HUD will
                                   pay for the Flood Certification.
 
* Home Inspection                  The actual cost of the home inspection
(Includes testing for lead based   provided there are sufficient funds
remaining on Line 5 of             the sales contract.
paint, radon and mold if not
already tested)
 
* Homeowner's Warranty             The actual cost not to exceed the maximum
                                   amounts in the following table:
 

 
*  Loan Discount Points            Up to three percent to buy down the rate with
                                   certification from lender.
 
*  Loan Origination Fee            Up to one percent will be paid on
                                   conventional/FHA mortgages; up to one and a
                                   half percent will be paid on FHA 203(k)
                                   mortgages.
 
* Prepaid and Escrow Items for     (excludes Hazard insurance)
Owner-occupant Purchasers Only
 
* Recording and/or transfer taxes or    If, under state or local law, the
  fees (i.e., amounts charged as a      recording fees and/or transfer
  percentage of value)                  charges or taxes are imposed on the
                                        Seller (i.e., HUD), then HUD is
                                        immune from paying these charges and
                                        will not pay them. If however, the
                                        charges are imposed on the purchaser,
                                        HUD may pay these charges on behalf of
                                        the purchaser if funds remain in line 5.
                                        Please consult with the Homeownership
                                        Center for additional information.
 
* Survey, if required by lender         Actual cost subject to
                                        funds available on Line 5
* Title Insurance Coverage for Lender   Actual cost subject to
                                        funds available on Line 5
 
* Title Insurance Coverage for Owner    Actual cost subject to funds
                                        available on Line 5
 
     The above represents the complete listing of allowable closing
costs in conjunction with the sale of properties owned by the
Department.  If you have any questions, please contact
Wanda Sampedro of the Asset Management and Disposition Division at
(202) 708-1672.
 
____________________________________________
Assistant Secretary for Housing-
    Federal Housing Commissioner
 
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