HUD BSCA (Buyer Select Closing Agent)
1. What is the Buyer Select Closing Agent Program (BSCA)?
The program will replace HUD’s Designated Closing Agent and designed for potential cost savings to the FHA MMI Fund. The buyer can select their own settlement company. This approach is more in line with current industry standards and will benefit the agency in time and money spent in managing contracts. This new program will also help facility faster closings.
2. How does the buyer select a title company under the BSCA.
At the time of bidding on a HUD property on the HUDhomestore.com the selling agent will select the Titel company from the drop-down selection when submitting the bid. If the Title company is not present. The buyer's agent will continue to complete and provide the required information as shown on screen.
3. Does the buyer have to state upfront who they are using to close?
Yes, they must choose a BSCA before HUD will sign the contract, however, if they are unhappy with their BSCA they can change after the contract is signed.
4. Are all Asset Management Companies following the new BSCA program?
Yes, while there may be small differences in procedure, this is a policy set forth by HUD that each AM must comply with. Please contact each AM individually to learn about their BSCA procedures.
5. Can Listing Listing Brokers refer buyers or agents to specific settlement companies?
NO. Unless they are acting as dual agents, as this would be a conflict of interest.
6. Is there a list of all HUD approved closing agents?
There is not a list that has been published, however Marketing Specialists have access to the database and can be contacted should you need further information.
7. How do homebuyers know which closing agent to select?
Agents/Brokers are encouraged to get familiar with the closing agents in their area.
As a real estate professional, it will be to your advantage to get to know the fee structures and experience levels in selling HUD homes of closing agents in your area.
Agents/Broker can offer a list of closing agents to homebuyers, however you are prohibited from recommending a particular BSCA exclusively.
8. Who pays closing costs?
Under the Buyer Select Program closing fees are the Buyer’s expense.
HUD will pay only a portion of the closing fees if the buyer includes closing costs on Line 5 the sales contract when the bid is submitted and there are sufficient funds remaining to allow for the fee to be paid.
If no closing costs are included in the bid submission to HUD, the buyer will be required to pay all settlement and closing fees.
9. Will HUD pay traditional closing costs and settlement fee?
HUD will pay only a portion of the closing fees if the buyer includes closing costs on line 5 of the sales contract when the bid is submitted and there are sufficient funds remaining to allow for the fee to be paid.
10. HUD still pays the customary sellers closing cost (sales taxes, taxes and recording fees). Is that correct?
HUD does still pay recording fees and real estate property taxes, yes.
11. Is line 5 still limited to 3%?
Yes, 3% maximum
Closing Costs Customarily Paid by HUD:
Proration of property taxes and any special assessments such as Homeowner’s Assoc. fees and utility bills
Condo or HOA Transfer Fee, if applicable
Cost to provide condominium documents reimbursable expense
Repair Escrow Inspection Fee of $200 where applicable
Recording Fees (for deed only)
If it is a standard practice and customary in a state, HUD will pay the Deed recording fee, but Line 5 monies are used first. If there are no Line 5 monies, then HUD will pay.
There are additional allowable closing costs that may be paid by HUD at closing if there are sufficient funds on Line 5 of the sales contract to cover the expenses.
Additional allowable closing costs that may be paid by HUD at sales closing if there are sufficient funds on Line 5 of the sales contract to cover the expenses:
•Credit Report (up to $20)
•Home Inspection (Includes testing for lead-based paint, radon and mold if not already tested.)
•Loan Discount Points
•Loan Origination Fee
•Prepaid and Escrow Items (for owner-occupants only)
•Survey, if required by lender
•Title Insurance Coverage for Lender
•Title Insurance Coverage for Owner
•Settlement or Closing Agent Fee
12. If our current attorney’s and/or title companies have done closings for HUD in the past, must they need all discussed documents before receiving the required ID?
Yes, but they will only need to submit the information once. Once they are HUD approved they will be given a title ID which they can use on all future deals.
13. If a buyer wants to use their own attorney, that attorney must be approved in advance, correct?
Not necessarily. If they have not been approved previously they would submit the required information with the contract package and they can be approved at that time.
14. Closing Agents only need to fill out the form once, correct?
Yes, once Agents have a Title ID they are all set.
15. How long does it take to get a title ID?
There is a 24 to 48 hour turn around to receive the title ID.
16. Does a new title ID need to be applied for with each asset manager?
No, once a BSCA has their title ID it will be the same for all asset managers.
17. Is the Buyer’s Agent Title ID the same as a NAID?
No, the Title ID is a unique identifier for Closing Agents..
18. Does the closing agent have to have a separate ID for each state or can they use the same one?
They may use the same ID, but it is better to have one for the local office.
19. Who will be HUD’s POA?
The deed and HUD1 will be signed by our office prior to closing and overnighted to the BSCA for closing.
20. HUD will NOT pay for the preparation of the deed to convey the property to the buyer, correct?
21. Is the BSCA Closing agent handling the closing for both sides – buyer and seller? If so, is the BSCA paid for the seller side?
The BSCA is the only title company/attorney on the deal. The seller, HUD, does not pay the BSCA for conducting the closing.
22.Can the buyer’s closing attorney/settlement be the closing attorney for HUD?
There is no closing attorney for HUD. It is the buyer who selects the attorney/title company. It is their choice whether or not to choose at the suggestion of their lender.
23. Will HUD clear the title prior to marketing the property?
The Closing Agent is responsible for completing a title search and they will notify Ofori if a major issue is found. The BSCA should clear any minor title issues.
24.Who will address title issues?
The Closing Agent will address any title issues and send relevant information to Ofori.
25. How will contract extensions be handled?
Under BSCA, the extension fee should come from the selling agent to the Asset Manager. Like EMD, no personal checks are accepted. The check should be made payable to HUD. You must submit the Extension form 5 days prior to contract expiration.
26. Under BSCA are the timelines for setting up closing dates going to remain the same 10 days with HUD1 to HUD within 48 hours?
We ask for 5 days notice on scheduling and a HUD1 within 48 hours is preferred.
27. Does the clock for the 24 hour deadline to deposit into the NLB’s trust account start when Ofori signs the contract, or when it is received?
When the contract is signed and sent to you, you have 24 hours to deposit the EMD.
28. Many times the selling agent does not have the authority to order an HOA package because he does not have an interest in the property. What should we do?
If for some reason this happens they would want to notify us and we may be able to order it through the FSM. Ultimately the responsibility traditionally lies with the selling agent.
29. Cancellation requests are sent by the buyer’s agent directly to Asset Manager not the NLB, correct?
30. How much notice will we get before closing?
You should still receive a ready to close inspection order within 5 days of closing.
31.Will the extension fee be waived if title issues can’t be cleared in time?
With the exception of where extension funds are to be sent, the guidelines have not changed. If proper notice is given regarding title issues, fees are likely to be waived.
At the time of bid submission, the selling agent is required to complete the Buyer Select Addendum which will provide the asset manager with the name and contact information on it for the selected Closing Agent.
The Buyer Select Addendum must be included with the sales contract package.
Not submitting the Buyer Select Addendum with the contract package will create delays and
possible cancellation of the contract.
Each BSCA office must have separate ID numbers.
Selling Agents Verify the Buyer Select Closing Agent (BSCA) has a HUD Closing Agent
Sales Contract will not be executed until BSCA has been issued a Title ID Number from HUD, which is different from a NAID