IMPORTANT THINGS TO KNOW FOR CLOSING AGENTS
Buyer’s Select Closing Agent (BSCA) Implementation
PLEASE READ ALL THE WAY THROUGH!
GUIDELINES FOR CLOSING AGENT:
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Must be an attorney, title company or escrow company and follow applicable federal state
and local laws for your state
HUD requires all buyer select closing agents to be covered by Errors and Omissions Insurance
of at least $1m
No closing entity currently debarred, suspended or otherwise excluded from participating in
HUD transactions or federal programs, may participate in any aspect of the closing or title
clearance process.
FOR A TITLE ID – CURRENT license needs to be provided with the first Buyer Select Addendum
(SAMS Buyer Select Closing Agent Form found in the contract package) you submit.
Closing entities who have, or whose immediate family member, or business associates have, a
financial interest in the property not be involved in the closing process.
Failure to adhere to HUD requirements or guidance will result in sanctions included, but not
limited to, financial penalties and or being banded from closing on HUD properties.
TITLE ID (SAMS BUYER SELECT CLOSING AGENT FORM FOUND IN THE CONTRACT PKG):
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Auto fillable – DO NOT HAND WRITE.
Authorizes HUD’s Asset Manager to release contract to Closing Company
USE CORRECT CASE #!!
 Must have correct contact information for all involved parties.
 Closing agent information – FILL THIS OUT HOW YOU WANT IT REFLECTED ON YOUR TITLE ID.
 Primary contact person – this is the person who will be receiving the contracts and all emails
regarding HUD transactions.
 Write down your title id’s for all of your offices and make your staff aware of which is which.
 Title ID/SAMS Buyer Select Closing Agent Form MUST CONTAIN ORIGINAL SIGNATURES
YOU CAN NOT SUBMIT A TITLE ID FORM/SAMS Buyer Select Closing Agent Form UNTIL YOU HAVE A
CONTRACT. YOU MUST SUBMIT E&O Insurance ($1m) and proof of active license. (ALL DOCS MUST BE
ACTIVE WITHIN 60 DAYS) If any supporting doc expires within 60 days, evidence of renewal must be
submitted.
CLOSING INSTRUCTIONS & CERTIFICATION (FOUND IN THE CONTRACT PKG):
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Closing agents must acknowledge closing instructions and certification (included in contract
package)
Six pages – goes through all the rules for Buyer Select
ON PAGE SIX OF CONTRACT PACKAGE – Signature needed by BUYER SELECT CLOSING AGENT
NOTICE OF EXECUTED CONTRACT:
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After the sales contract is approved and executed by HUD’s Asset Manager, it will be
uploaded to the internal database
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The morning following an automated email will be sent to the buyer selected closing agent
(LINKS – NOT ATTACHMENTS)
The email will contain a link to the executed sales contract and the COLOR COPY of appraisal
completed by HUD’s Asset Manager.
CONTRACT AMENDMENTS:
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Closing agents and selling agents are not authorized to modify the terms of the contract
(including name, title, financing and occupancy status). These requests must be sent by the
selling agent to HUD’s Asset Manager.
NOTE: Changing financing from FHA to Conventional – Buyer will be responsible for reimbursing HUD
the completed termite and LBP inspections and stabilization.
 ALL AMENDMENTS can be found at www.hudpemco.com or www.hometelosfirst.com – follow
instructions for emailing in amendment – the correct email will be found on the Amendment
form.
 Amendments are NOT a sufficient reason for a contract extension.
 Any change in financing must be submitted BEFORE closing, as an addendum – the sooner,
the better, as it will prevent HUD’s Asset Manager from completing a termite and LBP
inspection and having to charge the buyer.
 Same applies even going from conventional TO FHA financing – the inspections will need to
be ordered, and so will delay closing if not done in time.
 If buyer decides to change closing agents after contract – new forms, new earnest money,
etc is required – also buyer will be responsible for reimbursing the first closing agent if need be.
PRE-CLOSING ACTIVITIES:
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The closing agent shall establish a closing file immediately upon receipt of a complete
contract package from the Asset manager. No action shall be taken until a complete
package is received.
A complete contract package shall include:
 A signed sales purchase contract (HUD-9548) with all addendums and amendments
 Earnest Money – the certified funds (ie cashiers check or US money order, NO
PERSONAL CHECKS) MADE PAYABLE TO CLOSING AGENT ONLY. (will be sent separately
by listing broker)
The Closing Agent shall request HOA fees, utilities and any other demands.
The final bills are the responsibility of the BUYER’S SIDE. If an extension is needed to this end,
the cost will be the buyer’s.
Closing agent is to forward all applicable demands with supporting documents to HUD’s Asset
Manager for approval. Remit all demands no less than 10 days prior to closing to ensure timely
payment and approval. HUD’s Asset Manager needs a ledger – basically a breakdown of all
costs.
FEES REQUIRING PAYMENT IN ADVANCE OF CLOSING:
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The closing agent/selling agent CANNOT pay fees for (including but not limited to) paid
assessment letters, deed or transfer stamps without prior approval from HUD’s Asset Manager.
(If you do this, you are obligating federal funds without permission and you will not be
reimbursed.)
The Selling Team of Century 21 Selling Paradise, Inc.
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Reimbursement on the HUD-1 out of the seller proceeds for payment of these fees will NOT
occur without PRIOR approval from HUD’s Asset Manager. Reimbursement will NOT OCCUR if
file fails to close.
All liens and or bills attributed to prior mortgagor or mortgagee that are affecting title must be
remitted to HUD’s Asset Manager for review. Please do not assume payoff will occur on the
HUD-1 settlement statement out of the seller’s proceeds. Failure to remit said liens will result
in the disapproval of the HUD-1 settlement and could delay or cancel closing.
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The Closing Agent shall process and handle any and all loan documents the lender require for
a customary HUD closing
To ensure there are no delays, the Closing Agent shall provide timely processing and delivery
of the signed loan documents to the lender. If this does not occur and extensions are
required, it will be considered a BUYER SIDE DELAY and the buyer side will be responsible for
fees.
Please be notified in some instances a sale may be cancelled by HUD and/or HUD’s Asset
Manager due to title issues. In these instances, the purchaser will NOT be reimbursed for fees
incurred prior to cancellation. (This is when there is a fatal issue with the title - these houses will
be reconveyed.)
It is REQUIRED BY HUD’s Asset Managers that the LISTING BROKER get the EMD to
the Closing Agent within TWO DAYS of contract execution.
EMD GUIDELINES FOR CLOSING AGENT:
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If the closing agent does not receive the earnest money within three days of receipt of the
signed sales contract, the closing agent shall on the fourth day return the contract package
marked “no earnest money received” and email notice shall be submitted to the asset
manager.
Closing agent is to adhere to the Earnest Money Guidelines and HUDs Forfeiture and Extension
Policy as detailed in the complete sales contract package.
The closing agent will not release the Earnest Money to any party (buyer or seller) without
specific written instructions from HUD’s Asset Manager – if cancellation occurs (regardless of
who initiated it) it is processed by HUD’s Asset Manager and then the form will be returned to
the closing agent and selling agent outlining how the EM is to be remitted. Failure to comply
with this requirement could jeopardize your firm’s ability to close HUD transactions.
When bills are paid by HUD or HUD’s Asset Manager, a proof of payment will be sent to the
closing and selling agents.
REGARDLESS of if a bill has been attached to title or not, it needs to be submitted to HUD’s
Asset Manager for payment.
EXTENSION REQUESTS:
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It is HUD’s expectation for all closings to occur within the allotted time shown in line 9 of the
sales contract (45 or 60 days from execution)
Cover sheet also gives an expiration date for the contract – notifications are sent via email of
impending contract expirations. (5 notifications are sent starting 5 days before expiration.)
EXTENSIONS MUST BE REMITTED 5 DAYS PRIOR TO EXPIRATION
If closing is not going to occur prior to the expiration date, an Extension Request Form must be
submitted.
ALL EXTENSION REQUESTS REQUIRE A FEE – except when there has been a delay by HUD, HUD’s
Asset Manager or the FSM.
The Selling Team of Century 21 Selling Paradise, Inc.
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HUD’s Asset Manager will return via email the executed extension form indicating whether the
extension has been approved or denied to the selling agent and if there are any fees waived.
Please Note: A buyer will not be reimbursed for lender lock rate extensions, regardless of the
cause of delay.
Owner occupants will be granted one free extension when there has been a delay with
financing and all buyer documents have been submitted in a timely manner MUST BE TRUE
LENDER DELAY
It is recommended that buyers and/or their agents get their lender started at the time of
preapproval (gather and submit needed documentation to lender so that all that is needed is
the executed contract to move forward)
Two free extensions will be granted (in 15 day increments) for 203k loans (supporting docs to
be submitted confirming status and delay) (NEED AN UPDATED LOAN APPROVAL)
All extensions must include the extension request form and supporting docs; including current
lender letter or proof of cash funds and extension fee
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If no request is received, the contract will be cancelled following the day of expiration
and the earnest money will be forfeited to HUD.
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Hard copies must be remitted with the extension fee to HUD’s Asset Manager’s office.
Extension fee, when applicable, must be made payable to HUD. (CERTIFIED FUNDS ONLY!)
Requests for extensions with fee waivers are emailed directly to HUD’s Asset Manager.
If there is no imminent closing, extensions will be denied and buyer forfeits fees.
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PRELIMINARY/ESTIMATED HUD-1:
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No less than 5 days prior to closing, the Closing Agent is to send the preliminary/estimated
HUD-1 to HUD’s Asset Manager for review.
HUD’s Asset Manager must review all revisions.
Closing may NOT occur without an approved HUD-1 (including revisions)
Approved HUD-1’s will be returned to closing agent ELECTRONICALLY.
SUBMITTING AN ACCURATE PRELIMINARY HUD-1 FOR REVIEW:
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CASE NUMBERS ON EVERYTHING – ESPECIALLY IN THE SUBJECT LINE OF EMAILS (This is how HUD’s
Asset Manager searches their emails for correspondence)
HUD-1 and signature affidavits must be included when submitting to HUD’s Asset Manager
FHA case number on the HUD1 – Generally input in field #8 along with the NEW FHA case
number or in the “Seller Name” field
Address for the seller must show the address for the appropriate HOC
Include supporting documentation of any charges to be paid by HUD on the settlement
statement (includes but not limited to past due utility bills taxes and HOA invoices) HUD MAY
PAY CLOSING COSTS ONLY UP TO 3% AND ONLY IF IT IS ASKED FOR IN THE ORIGINAL BID.
Must include a seller paid closing cost itemization of all costs to be paid by the seller out of the
line 5 closing costs. This breakdown is for HUD’s documentation to confirm costs are
reasonable and customary and do not exceed the total allowed on line 5.
Copy of approved extension fees to be shown on the HUD-1, if applicable. All extension fees
charged must be shown on the HUD-1. Unused days will be prorated as a credit.
HUD-1 LINE ITEM REQUIREMENTS:
HUD will only allow the use of certain line items on the settlement statement. All HUD-1 submitted must
accurately reflect the use of the lines below or will be REJECTED.
500 Series – Reduction in Amounts Due to Seller
The Selling Team of Century 21 Selling Paradise, Inc.
503 – Existing loans taken subject to. This line is exclusively reserved for existing loan(s) for
purchase money mortgage (PMM) sales
504 – Payoff of first mortgage loan. The use of this line is prohibited
505 – Payoff of second mortgage loan. The use of this line is prohibited
506 – Extension fee refunds. This line is exclusively reserved for extension fee refunds
507 – marketing allowances and sales discounts. This line is exclusively reserved for
marketing allowances and sales discounts approved by HUD at the time of
acceptance of the sales offer.
513 – All other unpaid tax and assessments. This line is exclusively reserved for “base tax
expenses not reported on lines 510 (city tax) or 511 (county tax) or 512 (assessments).
This line may NOT be used to record tax penalty and interest.
514 – Penalty and interest for taxes
515-518 – These lines are reserved for expenses not specifically addressed above.
However, they must not be used to record expenses that are required to be reported
on other lines.
THESE LINE ITEMS ARE USED THE WAY HUD REQUIRES OR THE CLOSING DOES NOT OCCUR. IF YOUR
SOFTWARE DOES NOT SUPPORT CERTAIN LINE ITEMS, YOU MUST MANUALLY PREPARE THE SETTLEMENT
STATEMENT.
CLOSING COSTS AUTOMATICALLY PAID BY HUD:
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Proration of property taxes, HOA fees and utility bills
Condo or HOA transfer fee, if applicable
Cost to provide condo docs to purchaser. (If paid in advance, seek prior approval to ensure
reimbursement)
$200 repair escrow hold fee, applicable to FHA 203b with repair escrow financing only
Recording fees for the grant deed only
HUD SETTLEMENT STATEMENT ATTACHMENT LINE 5 DISTRIBUTION:
Checklist needs to be submitted with the following breakdown (example):
1% Lender Loan Origination Fee_____
Credit Report (Max $20.00 per file)______
Flood Certification_____
Tax Service Underwriting Fee Processing Fee______
Home Inspection Report (Max $250)__________
Homeowners Warranty (Max $300)______
Title Policy: Owners_______
Title Policy: Lenders_______
8.1 Lenders Title Policy Endorsement_______
Documentary Transfer Tax_______
Hazard Insurance_______
Flood Insurance, if applicable_______
Signing & Notary Fees_______
Tax Impounds (up to 6 months)_______
Natural Hazard Disclosure_______
Per Diem Interest (portion)_______
Line 5 Per Contract _________
Total ____________
The Selling Team of Century 21 Selling Paradise, Inc.
LIENS:
Attention CLOSING AGENTS: All liens and/or bills attributed to prior mortgagor or mortgagee that
are affecting title must be remitted to HUD’s Asset Manager for review. Please do not assume payoff
will occur on the HUD-1 settlement statement out of the seller’s proceeds. Failure to remit said liens
will result in the disapproval of the HUD-1 settlement statement and could delay or cancel closing.
Please remit liens and any supporting documents/bills no later than 5 calendar days after the
preliminary title report is received.
HUD NOTICES AND MORTGAGEE LETTERS (ML):
HUD notices and ML identify allowable closing costs in connection with the sale of HUD-Owned single
family properties, detailing which costs are reasonable and customary in the area of the closing.
 The stated maximum allowable amount is on line 5 of the purchase contract
 Line 5 items must be shown as a gross number on page 2 of the HUD-1 but itemized on page 2
and 3 with an attached worksheet
ML and notices to reference are:
ML 2009-53 clarifies how fees and charges for FHA must be disclosed on HUD-1
Notice H2011-33 clarifies closing cost payable by HUD
ML 11-18 clarifies the removal of the 1% origination fee cap except on 203k
DEEDS:
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Need HUD-1 AND Deed 5 days prior to closing
Include all deeds in email with preliminary/estimated HUD-1 to HUD’s Asset Manager.
PEMCO uses two day delivery for all Buyer Select/Buyer Choice Deeds. IF HUD’s Asset
Manager NEEDS TO SEND A SECOND DEED, WE WILL REQUEST THAT THE CLOSING AGENT
PROVIDES THE FEDEX LABEL
Deeds may not be executed more than 5 days prior to the actual closing date
If a case fails to close or the deed expires, the closing agent must write “void” on the
document and return the original back to the HUD’s Asset Manager within 2 business days.
Be sure to submit contact information when submitting a Deed for HUD’s Asset Manager to
return the original
EXPIRED CONTRACTS:
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The closing agent shall electronically notify HUD’s Asset Manager of the properties that failed
to close within ONE BUSINESS DAY after the failed closing.
The Closing Agent shall return any unpaid tax, HOA or utility bills within TWO BUSINESS DAYS of a
failed closing.
Should the purchaser cancel or fail to close, he/she will be responsible for any cancellation
fees.
Upon receipt of a contract cancellation notification from HUD’s Asset Manager, the closing
agent shall disburse the earnest money and extension fees (if applicable) within FIVE BUSINESS
DAYS in accordance with the disposition instructions provided by HUD’s Asset Manager.
DO NOT DEFAULT ON EARNEST MONEY – YOUR TITLE ID WILL BE CANCELLED
POST CLOSING:
The closing agent shall perform all necessary post closing activities, including but not limited to those
outlined below to ensure HUD is able to accurately and timely reconcile the closing. The closing
agent must retain copies to verify completion of each task.
The Selling Team of Century 21 Selling Paradise, Inc.
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The same day closing occurs, the closing agent must send an email notification
No later than one banking day after closing, the closing agent shall wire the net proceeds to
the US Treasury via FEDWIRE using the HUD form (SAMS-1103) provided by HUD’s Asset
Manager at the time of contract execution.
No later than one business day after closing, deliver the deed for legal recordation in the
appropriate county and provide written verification to HUD’s Asset Manager, the Taxing
Authority and HOA.
FINAL HUD-1 PACKAGE TO BE SUBMITTED TO HUD’S ASSET MANAGER:
No later than TWO BUSINESS DAYS after closing has occurred, a final post-closing package is due to
HUD’s Asset Manager and must include:
 Final HUD-1 and all signed certifications
 Evidence the deed was delivered for recordation or a recorded copy.
 Copy of the blank fully executed transfer of proceeds (wire confirmation)
 Copy of all applicable invoices or receipts of disbursements
 Copy of the disbursement log accounting for all incoming and outgoing funds related to the
transaction.
NOTE: It is CRITICAL that the “old” FHA case number is included/stated on the wire transaction so the
funds can be correctly applied.
GOOD NEIGHBOR NEXT DOOR (GNND) CLOSINGS:
The final closing package for GNND closings must also include the following documents:
 Original Note
 Copy of the Mortgage with evidence that it was delivered for recording
 Copy of the recorded Mortgage, when available
SUBMIT WITHIN FIVE BUSINESS DAYS
PEMCO CONTACT INFORMATION
Atlanta Office States: [email protected]
HOMETELOS WILL COMMUNICATE DIRECTLY WITH
CLOSING AGENTS REGARDING CONTACT INFO AND
REQUIREMENTS.
For additional training on BSCA procedures for both selling
and closing agents you can also visit:
http://www.ustream.tv/recorded/34922421/pop-out
The Selling Team of Century 21 Selling Paradise, Inc.