1. Money

HUD-1 Settlement Statement Reserves Deposited with Lender

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In the HUD-1 Settlement Statement 1000 item series, the lender requires sums to be deposited and held for future payment of taxes, insurance, etc. These are variously called reserves, escrows, or impounds.

The cost of each of the various tax and insurance items is calculated as a monthly amount. Then a certain number of months is specified to be witheld by the lender for future payment of each line item. This builds the account that is contributed to each month from the mortgage payment to make sure that funds are available for these important tax and insurance items when they come due.

This is an estimation process, and premiums as well as taxes change. For this reason, this account can begin to fall short of the amounts it needs, or it can begin to accumulate an excess over the necessary amounts to pay the obligations. The account will be analyzed annually and any adjustments necessary to the witholding will be made. It could go up or down, with a corresponding adjustment of the mortgage payment.

These items are DEBITS to the Buyer side left column "Paid from Buyers Funds at Settlement."

The last line item is the "Aggregate Adjustment." It is an accounting adjustment based on the difference between considering the items separately or as a group total. This adjustment will usually be a negative number. If you need to know more, this adjustment is determined according to HUD instructions in section 3500.12(d)

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