Home Buying in East Flatbush>Question Details

Curious T, Home Buyer in Brooklyn, NY

Is it normal for the bank (Chase) to do a HUD 1 first before accepting an offer on a short sale?

Asked by Curious T, Brooklyn, NY Thu Apr 7, 2011

I made an offer on a short sale 4 weeks ago. To date no response from the listing agent regarding whether or not my offer has been accepted. My agent just notified me that the bank (Chase) or company that is handling the short sale wants to do a HUD 1 first....is this normal?

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Ron Thomas’ answer
The Bank does not do a HUD1; the Title Company does. This shows the fees and charges for both the Buyer and Seller, in two columns, as well as the funds needed for Closing.
The Bank does a GFE which stands for Good Faith Estimate: This shows the Interest Rate and the APR, as well as all the fees that are being changed; such as Recording Fee, Notary, etc.
Both of these doc's are required by Federal Law.
0 votes Thank Flag Link Wed Mar 6, 2013
Hello, I have done so many short sales over the years and the seller's bank will request a HUD 1 right away. The purpose is to see all the expenses and any income due for the buyer and seller, Realtor fees, liens on the property and more. This is so the seller's bank can determine what their net profit will be after the sale of the home. So it's totally normal, a HUD 1 is not for you to pay anything up front its so the seller's bank knows where they stand.

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0 votes Thank Flag Link Wed Mar 6, 2013
They will want a HUD1 for 2 reasons. First, to determine what their costs will be that must be paid out before they get their money, which, keep in mind, is less than the amount they are owed. Second, they may want to make sure you have enough money to close. On a short sale, you, the buyer, will pay the transfer tax. In NYC, between transfer tax and mortgage tax, unless you have a substantial down payment, you are talking about close to 4% of purchase price for that alone.
0 votes Thank Flag Link Mon Apr 11, 2011
when dealing with a short-sale you will expect the bank to ask frequently for a HUD-1. Your agent should go over the process with you, it could take approximately up to 90 to 120 days, sometimes more depending on the bank.

Every short-sale is different and relies on the lender as it does on the listing agent that has an agreement with the bank.
0 votes Thank Flag Link Mon Apr 11, 2011
I am not sure if it is normal or not but some time the sequence can be altered to achieve the goal. In fact, my agent and I are negotiating terms and condition of a shortsale contract and addendum (basically HUD-1 outcome) with the listing agent even before I submit an offer. If we can't agree on the term in principle, then we will not waste any one time.
0 votes Thank Flag Link Thu Apr 7, 2011
HUDs are a normal part of the process. Your agent will generally tell you that this is to be expected up front but no worries, the HUD is to be expected.
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0 votes Thank Flag Link Thu Apr 7, 2011
Yes it is normal. The listing agent should have had a preliminary HUD-1 drafted that reflected all the terms set within the contract. Thus Chase could examine all the specifics as well as what the net amount to Chase bank would be. They must have a HUD-1 to see exaclty what their net proceeds would be from the short sale in order to fully approve the short sale.
0 votes Thank Flag Link Thu Apr 7, 2011
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