HUD is short for Housing and Urban Development. The Housing and Urban Development Settlement Statement refers to a document issued when a borrower takes out a loan to purchase real estate. Furthermore, The HUD Settlement Statement lists all charges and credits to the buyer and the seller in a real estate settlement or all the mortgage refinance charges. To record a HUD Settlement Statement, it is essential to understand what this statement entails. The HUD Settlement Statement consists of vital financial and personal information of the parties involved, such as the buyer and seller, property details, settlement agent details, and the figures (numerical data). These figures and their recording in financial books will be discussed in detail below.
How to Record a HUD Settlement Statement
The list of transactions involved and their treatment in the books will be sorted out in this section.
Credits – will list the gross amount owed to the seller at the time of settlement closing:
- Contract’s Sale Price
- Personal Property
- Any additional credits to the seller, including money owed to the seller by the buyer of this HUD Settlement Statement
- Other credit entries to the seller’s account may be made for adjustments that have been settled by the seller in advances such as prepaid taxes, homeowner association dues, and expenses of the sort
Debits – will list the charges of the seller at the time of settlement closing:
- Any excess deposits made by the buyer
- Settlement charges paid by the seller
- Full or partial payment of mortgage loans or other owed liens will be debited in the seller’s account
- Debit entries will also consist of closing costs paid by the seller on behalf of the buyer
- Lastly, any adjustments for items unpaid by the seller, for instance, pro-ration of property taxes, security deposits, and things that are to be credited to the buyer
The list of transactions involved and their treatment in the books will be mentioned in this section.
Debits – will list the gross amount owed by the buyer at the time of statement closing:
- Contract’s Sale Price (remember that this is the double-entry made alongside the credit earned to the seller, as mentioned above)
- Personal Property
- Settlement charges paid by the buyer
- Any amounts due from the buyer
- Adjustments for items that have been settled in advance by the seller may be shown as miscellaneous expenses
Credits will list the amount paid by the buyer or those paid on behalf of the HUD Settlement Statement buyer:
- Deposit made by the buyer
- The loan amount
- The amount owed by the seller to the buying party is a credit entry and must be recorded. This is the double-entry made in opposition to point no. Five made in the list of seller’s debit transactions
- Property tax and assessment pro-ration credits from seller to the buyer of the HUD Settlement Statement
- Lastly, any additional credits to the buyer will be entered here, be it from any source, if not from the seller.
Now that both parties’ debits and credits have been identified in the HUD Settlement Statement, these will be entered. The total balances on both accounts shall be estimated in the accounting books to serve bookkeeping purposes. The treatment of these entries will be carried forward to General Ledger, as is done for all other accounts in the accounts chart.
Since the HUD Settlement Statement lists all charges and credits to the buyer and the seller in a real estate settlement or all the mortgage refinance charges. It is important to all the parties involved in a home purchase through Housing and Urban Development.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.