A note of caution to Realtors representing sellers:
Entropymom was kind enough to share details of the settlement statement with me. It appears to me that during the weekend, the lender and the settlement agent scrambled to make adjustments in the HUD-1 to increase the amount of the seller's contribution in closing costs so that the buyer could conclude the transaction. While the seller's contribution is in line with FHA rules, the way the HUD-1 was revised was a little unusual, in my opinion.
As noted by Renee below, Realtors should carefully examine the HUD-1 with the seller(s) and also compare the HUD-1 with the purchase contract. Items such as seller(s) contributions to buyer's closing costs and who shall pay certain fees should be scrubbed against the contract. Sometimes, in the rush to meet closing deadlines, shortcuts might be taken. I'm not suggesting that anything improper was done (aside from the questions about the source of the buyer's gift funds) , but there are kosher ways to prepare a HUD-1 and ways that aren't kosher. Perhaps I'm just a mule-headed stickler for doing things a certain way... even if a last minute addendum is required and a possible delay of a day or two for revisions to be approved.
A HUD-1 should ALWAYS EXACTLY match the fee and contribution agreement of the original contract. A HUD-1 that isn't perfectly clear to both parties might later create misunderstandings between the parties. At minimum, an unclear HUD-1 may leave doubts in the minds of the seller(s). Realtors and loan originators deal with settlement statements daily as part of our job, but the vast majority of homeowners see them once or twice in a lifetime. Too many in both our industries - lending and real estate - perhaps forget that familiarity breeds contempt, and that what seems obvious to us is at best Greek to our clients.
I believe that the seller's agent is the last line of defense for a seller. Certainly the loan originator, the lender, and the buyer do not have an incentive to act in the seller's interest. The only expert defending the seller's interest is the selling Realtor. Defend them you must.
In my opinion, based upon limited facts, the loan originator performed poorly. The settlement agent was perhaps too eager to accommodate a rush to close. My opinion, again relying on limited facts, is based largely upon the last minute revisions to the HUD-1 as well as the seller's discomfort with the transaction - a very justifiable discomfort - that could have been avoided by a more exacting performance by the loan originator. The origination work was unacceptably sloppy.
Realtors, be suspicious. Ask more questions than you think you should. Demand clear and unequivocal answers regarding loan approvals and the ability of buyers to close. Amazingly, mortgage fraud is at a all-time high. Loan originators are struggling to survive, and in such an enviroment, the temptation to take shortcuts - or worse - to make a deal close is too high. Trust your instincts - they are probably right.