Question

What is a settlement statement

Answer 1

A settlement statement is a document that summarizes the terms and conditions of a settlement, most commonly a loan agreement. A loan settlement statement provides full disclosure of a loan’s terms, but most importantly it details all of the fees and charges that a borrower must pay extraneously from a loan’s interest. Different types of loans can have varying requirements for settlement statement documentation. Generally, loan settlement statements can also be referred to as closing statements.

Beyond just loans, settlement statements may also be used whenever a large settlement has taken place. Thus, settlement statements can be used in large business transactions or potentially in the legal, insurance, banking, and trading industries.

a settlement statement is part of a loan closing package provided to a borrower, usually from a loan officer at a lending institution. Comprehensive settlement statement documentation is required for mortgage loan products. It is also usually required for other types of loans as well. Commercial and personal loan borrowers will usually work with a loan officer who presents them with the closing, settlement statement. Some online lending and credit card agreements may provide different iterations of settlement statements that a borrower receives electronically. Borrowers are usually required to review and sign a closing, settlement statement in order to fully complete the lending process and receive their loan. The signing of the settlement statement also usually binds all of the terms associated with a loan, which typically cannot be easily amended.

In mortgage lending, there are two main types of settlement statements a borrower may encounter: closing disclosures and HUD-1 settlement statements. A mortgage closing disclosure is a type of standard settlement statement that is formulated and regulated for the mortgage lending market. The HUD-1 settlement statement is a type of closing statement used in reverse mortgages.