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U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D.C. 20410-8000
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
Subject: Closing Costs Paid by the U.S. Department of Housing
and Urban Development
This Notice supersedes Notice H 2005-12, and announces a new
and simplified policy on closing costs payable by the
Department on sales of single-family properties owned by the
U.S. Department of Housing and Urban Development (HUD). This
change is intended to align HUD home sale policies with the
industry practices.
Upon closing of a HUD-owned single-family property, the
Department will allow to be deducted from its proceeds,
purchaser financing and closing costs considered to be
reasonable and customary in the jurisdiction where the
property is located. Form-HUD-9548 (Sales Contract –
Property Disposition Program), shall be used to reflect the
total dollar amount HUD is expected to pay towards a
purchaser’s financing and closing costs. However, in no
event may the costs exceed three percent (3%) of the
property’s gross purchase price. If the total closing costs
reflected on the HUD 1 settlement statement are less than the
amount indicated on the sales contract, HUD will reimburse
only the actual costs charged and will not credit the
purchaser with any difference either in cash or through a
reduced purchase price.
Within the three percent (3%) allowance, HUD will reimburse
loan origination fees up to one percent of the mortgage.
However, on an FHA 203(k) rehabilitation mortgage loan, HUD
will reimburse one and a half percent (1.5%) of the mortgage.
The closing cost policy announced in this Notice shall be
effective for all sales contracts executed on or after the
thirtieth day following the issuance date reflected above.
____________________________________________
Brian D. Montgomery
Assistant Secretary for Housing-
Federal Housing Commissioner
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