Hud

[Gretel]

I am just running into something unexpected. I tried to make sense of the origination charge on page 2 but it was a weird % for line 803. Form 1098 shows a lower amount also. Since client gave me all the closing docs I started digging and found a break down of line 803: 1. actual origination charge, 2. underwriting fee, 3.processing fee.

I normally never ask for more than the first two page of the HUD and if line 803 looks reasonable this is what I take. I did not know that they can roll other fees into line 803. This is a Credit Union. One would think that they know what they are doing.

[AZ-Tax]

TTB has a useful chart

TTB has a useful chart breaking down the HUD.

[Roland Slugg]

Title and escrow companies do that quite often ... combine two or more items onto a single line on the settlement statement. Good thing you found that breakdown. I trust that the origination charge alone did agree with the $$$ reported on F-1098.

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For anyone interested I believe it is imperative that all final settlement statements, including those for re-fi's, should be analyzed and every amount reported on them be reconciled and "coded" into various categories: The ones I use include some or all of the following: S (selling price), P (purchase price), C (costs to purchase, sell or re-fi), Ln (loan, new), Lp (loan, paid), T (taxable item ... income or deduction), X (no basis or tax effect). The latter usually consists of funds deposited into escrow or received from the escrow by the buyer, seller or borrower. Additional letters/codes may be necessary for unusual other items. The dollar amounts for each code are then aggregated, and a little "balance sheet" is prepared to make sure the total of everything is $0. From there it's easy to report everything on the buyer's or seller's tax return. The item's coded "T" get reported on Schedule A if it's a personal purchase or sale, or on Schedule E if it's the purchase or sale of rental property. For an escrow covering the purchase or sale of a business, additional codes/letters may be required, such as I (inventory), E or F (furniture/equipment), G (good will), and so on.

[Gary2]

I've seen the combination broken down right on line 803, but don't think I've ever seen a case where it was separate.

If memory serves me, the only the points part come into play on the Sch. A, but the entire origination charge can be amortized if it's a rental or business property. Or is my memory wrong?