HUD is short for Housing and Urban Development. The HUD Settlement Statement refers to a document issued when a borrower takes out a loan to purchase real estate. To record a HUD Settlement Statement, it is essential to understand what this statement entails. The HUD Settlement Statement consists of the parties involved, including the buyer and seller, property details, settlement agent details, and the figures (numerical data) involved. We will discuss these figures and their recording in financial books in fact in the paragraphs that follow.
The list of transactions involved and their treatment in the books will sort 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 be made 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 handle 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 mortgage loans or other owed liens will reduce debt in the seller’s account
- Debit entries will also consist of closing costs paid by the seller on behalf of the buyer
- Lastly, all adjustments for items unpaid by the seller include the pro-ration of property taxes, security deposits, and things to credit the buyer
The list of transactions involved and their treatment will mention 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 as miscellaneous expenses
Credits – will list the amount paid by the buyer or those born on behalf of the buyer of the HUD Settlement Statement:
- Deposit made by the buyer
- The loan amounts
- The amount owed by the seller to the buying party is a credit entry and must record. The records are the double-entry made in opposition to point no. 5 made in the list of seller’s debits 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 from any source, if not from the seller
Now that the debits and credits for both parties have been identified in the HUD Settlement Statement, you will enter these, and you shall estimate the total balances on both accounts in the accounting books to serve for bookkeeping purposes. The treatment of these entries will be carried forward to General Ledger as is done for all other statements in the chart of accounts.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 platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO 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.