Settlement Statement
What Is a Settlement Statement?
A settlement statement is a document that sums up the terms and conditions of a settlement agreement between parties.
Regularly utilized for loan agreements, a settlement statement details the terms and conditions of the loan and all costs owed by or credits due to the buyer or seller. It likewise details any fees that a borrower must pay in addition to a loan's interest. Different types of loans have shifting requirements for settlement statement documentation. Mortgage loan settlement statements, utilized in real estate transactions, are often alluded to as closing statements.
Settlement statements may likewise be utilized to document large business transactions, insurance claims, or financial market trades.
Loan Settlement Statements
A settlement statement is part of a loan closing package gave to a borrower, ordinarily from a loan officer at a lending institution. Commercial and personal loan borrowers work with a loan officer who presents them with the closing and settlement statement.
Some online lending and credit card agreements may give different iterations of settlement statements that a borrower receives electronically. Borrowers are normally required to survey and sign a closing, or settlement, statement, to completely complete the lending system and receive their loan.
The signing of the settlement statement ties every one of the terms associated with a loan.
Real Estate Settlement Statements
Thorough settlement statement documentation is required for mortgage loan products. In mortgage lending, there are two primary types of settlement statements a borrower might encounter: closing disclosures and HUD-1 settlement statements.
A mortgage closing disclosure is a standard settlement statement that is formulated and regulated for the mortgage lending market. The HUD-1 settlement statement is a type of closing statement utilized in reverse mortgages.
The Real Estate Settlement Procedures Act (RESPA) administers the formulation of both closing disclosures and HUD-1 statements for the mortgage lending market. RESPA has been changed and updated throughout history to assist with overseeing mortgage lending disclosures and protect borrowers. RESPA requires a HUD-1 settlement statement for borrowers engaged with a reverse mortgage and the mortgage closing disclosure for any remaining types of mortgage loans.
Both types of settlement statements, or closing disclosures, give information on all aspects of the loan, including terms and conditions, and personal or entity information about the borrower. These forms detail the principal, interest, and closing costs, for example, commission charges, and service costs associated with the loan. Details on principal, interest, variable rates, prepayment penalties, and escrow requirements are likewise included.
Loan Fees
Loan settlement statements accompany a package of disclosures that assist a borrower with understanding the entirety of the terms and conditions of their loan. In addition to interest, a few loans have a variety of added costs which might include:
- Origination charges
- Appraisal fees
- Title administration costs
- Home inspection costs
- Foundation checking fees
- Underwriting fees
- Closing fees
- Loan insurance charges
Special Considerations
The term "settlement statement" is often associated with the closing of a loan. Be that as it may, other types of settlements can happen and require unique settlement statements.
Legal settlement: A legal settlement statement details the terms and conditions under which a legal matter has been settled. Legal settlement statements are often included to sum up payments required for a plaintiff or to detail progressing conditions required in a family custody settlement.
Insurance settlement: An insurance settlement documents the amount an insurer consents to pay the claimant after investigating an insurance claim.
Banking: In the banking industry, settlement statements are created consistently for internal banking operations. Settlement statements detail the daily settlement of funds. Settlement statements are additionally given to people when funds have settled in an account and are accessible for access.
Trading: In financial market trading, settlement statements give proof of a security's ownership transfer. Typically, stocks are transferred with a T+2 settlement date, where ownership is accomplished two days after the transaction is initiated.
Business transactions: Large business transactions, like mergers and acquisitions, can be documented with a closing or settlement statement. Like loan closing statements, these settlement statements give a far reaching package of details, with the settlement statement filling in as a summary sheet.
Highlights
- A settlement statement is a document listing the terms and conditions of a settlement agreement and details generally related costs or credits due to each party.
- A mortgage loan settlement statement is generally known as a closing statement.
- Settlement statements may likewise be utilized to document large business transactions, insurance claims, or financial market trades.
FAQ
What Is a Debt Settlement Statement?
At the point when attorneys and debt settlement companies effectively work for borrowers with large amounts of debt to reduce some or their obligations as a whole, a debt settlement statement sums up the debts erased, reduced, or otherwise amended after a debt settlement has been completed.
When Do I Receive a Settlement Statement for a Mortgage Loan?
At the point when both parties consent to the terms and conditions of the settlement agreement, including all costs and fees, the closing will be scheduled and you will receive your settlement statement. Often, you will receive instructions from your settlement agent on the best way to deliver the money owed, and you'll then attend the closing and give the required signatures.
Is a Settlement Statement the Same as a Closing Statement?
Indeed, a closing statement is generally used to allude to the settlement statement in a real estate transaction.
