PSI Oklahoma Real Estate Practice Test

When must a lender use HUD's Form (HUD-1) Uniform Settlement Statement?

1. When the loan is insured or guaranteed by a federal agency

2. For all real estate transactions

3. Only in commercial property deals

4. When the buyer requests it

The correct answer is: When the loan is insured or guaranteed by a federal agency

A lender must use HUD's Form (HUD-1) Uniform Settlement Statement when the loan is insured or guaranteed by a federal agency. This form serves as a detailed accounting of the financial transaction involved in the closing process for real estate transactions that fall under the jurisdiction of federally backed loans, such as those insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). The HUD-1 form is specifically designed to meet the regulations imposed by these federal agencies, ensuring transparency and clarity in the settlement process. It outlines the closing costs, fees, and any other financial elements of the transaction, providing both buyers and sellers with an accurate account of the financial aspects involved. In contrast, the other options do not accurately represent the scenarios in which a HUD-1 form is used. While it is important to have accurate statements for all real estate transactions, HUD-1 is specifically for federally-related loans. The form is not limited to commercial property deals; it applies to residential transactions backed by federal insurance or guarantees. Lastly, the use of the HUD-1 form is not contingent upon the buyer's request; it is a mandatory requirement under specific federal regulations concerning certain types of loans.