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Our office has been selected as the Closing Agent for the U.S.
Department of Housing and Urban Development (HUD) for its Iowa properties. As
you can imagine, since HUD sells homes throughout the entire country, there are
some very specific rules regarding their closings, and some of them might be a
bit different than a typical transaction. Here are some of the important things
to know:
 | Earnest Money: Earnest money must be forwarded to us immediately
after acceptance of the contract. Please forward a certified check
in the amount of the earnest money payable to "HUD or [insert buyers'
names from paragraph 2 of your Sales Contract]" to our office. If we do not
receive the earnest money check within seven days of contract acceptance,
the contract will be cancelled. |
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| Closing Agent: HUD considers our office as representing both
parties, including closing the lender’s portion of the sale. We are able to
issue Iowa Title Guaranty certificates, title opinions, and title insurance
for the lender, so there is no need to hire an additional closing agent. In
other words, if we close the loan for the lender, there will be no closing fee
to the buyer. If either the lender or buyer chooses to select an additional
closing agent, abstract company, title company, or attorney, the lender or
buyer would be responsible for paying for those services. Please note
that this refers only to acting as closing agent. We always recommend
that all parties to a real estate transaction hire their own attorney to
represent their interests. |
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| Fees and Settlement Statements: We will need all fees from everyone
at least seven days before closing. This includes all lender fees,
abstracting bills, inspection fees, etc. We are required to prepare a
complete settlement statement for approval and execution by HUD’s
Marketing and Management entity. Any changes to any fees after approval will
result in the closing being delayed. |
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| Closing Documents: All documents which require the seller’s
signature must be provided to us at least seven days prior to closing.
Only HUD’s Marketing and Management entity is authorized to sign on HUD’s
behalf. Our office cannot sign any documents on HUD’s behalf. Please be
aware that HUD is not required to sign a Composite Mortgage Affidavit. |
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| Funds at Closing:
We must receive a wire transfer prior to closing. The funds must be in our account
before we can start the closing. It is best if funds are wired one day prior
to closing to ensure a timely closing. |
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| Deed Recording: Our contract with HUD requires us to record the
deed. We simply cannot give the deed to anyone else. We would be happy to
record any other documents, including mortgage documents, after the deed,
provided we receive recording fees at closing. |
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| Preliminary Title Report and Abstracts:
Our contract requires us to provide a preliminary title report to HUD upon
receipt of the abstract. The title report will be addressed to HUD, but we
will be happy to forward a copy of it to anyone directly involved in the
transaction. The abstracts are generally updated within the last two months
and generally include the deed to HUD. Any continuation of the abstract
after this date will be the responsibility of the buyer or lender. HUD will
not pay any additional title examination, title opinion, or abstracting fees.
If the buyers or their lender would like the abstract updated, please be
advised that HUD will not pay for the abstract update. |
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| Deed Preparation: The grantees on the deed must match Paragraph 2
of the Sales Contract. If Paragraph 2 does not show the correct names for the
deed, an amendment to the Sales Contract must be obtained. No changes may be
made to the deed after it is signed by HUD, so please check with lenders and
buyer’s attorneys well in advance of closing to ensure that names, marital
status, and tenancies are acceptable to them. The deeds will be executed no
more than five days prior to closing, and will be coming to us from Minnesota.
Deeds expire five days after execution, so changing closing dates can cause
delays. |
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| Utility Bills and Other Seller Paid Items: We cannot pay
utility bills, special assessments, or other seller paid items on the
settlement statement, with the sole exception of tax bills. Any bills
for which the seller is responsible should be forwarded to us immediately upon
acceptance of the contract. HUD's Marketing and Management company is
responsible for paying these bills, and we are not allowed even to schedule a
closing until we receive a copy of the check from them. Our contract
does not require us to obtain bills or invoices for these items, and they
will remain unpaid if we do not receive bills or invoices. It can take
well one or more weeks for these items to be paid by HUD's Marketing and
Management company, so we urge you to obtain bills and invoices immediately
and forward them to us. |
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| Disbursement at Closing: We are required by our contract with HUD
to write checks for every item on the seller’s side of the HUD-1 Settlement
Statement, including real estate broker’s commissions, tax payments, and
utility payments. If there is an additional closing agent, this can be
confusing, since they are used to disbursing everything on the settlement
statement. We are more than happy to write checks for the buyer’s side of the
closing statement as well. Just let us know. |
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| The closing agent is responsible for ensuring timely reconciliation of
each escrow account. All parties agree that any unclaimed escrow funds or
outstanding checks for amounts paid directly or indirectly by HUD, will be
returned to the seller after a period of 180 days from the date of the
closing. |
Please contact us if you have any questions, concerns, or suggestions. It is
our job to ensure that your transaction closes smoothly and quickly, and we look
forward to working with you.
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