HUD error found after closing

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  • #6448

    We came across an error on a HUD after closing a workout transaction. We had a 0% tolerance cure due to listing a portion of a fee in the wrong place and we also overcharged on the attorney fees. All of the fees were financed into the loan amount. Normally we would do a revised HUD and cut a check to the borrower for the the amount of the cure or error. However with this being a workout loan would we be able to apply this cure as a principal reduction to the loan amount since there was not any money out of their pocket brought to closing….everything was financed? Everything I am finding says we must cut the check to the borrower but I just wanted to double check to see if this was an option.


    I agree with your analysis. Common sense would indicate that the cure amount should be applied to the loan balance, but this compliance and there is no room for commonsense in compliance. This seems to be case where the regulation is underdeveloped. It does not provide special rules for special situations.

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