Where's my NHD?

J.K. Nakata, U.S. Geological Survey

Anyone who has ever purchased a home knows the process is pretty involved - and sometimes very long.

Buyers in search of their dream home often spend months or even longer scoping out the local housing market, not to mention the school systems, bus lines, shopping centers and a host of other factors before making their buying decision. All told ... it an be an emotionally draining experience.

And then there are the fees - lots of them.

These run the gamut from city and county taxes to the appraisal fee and a credit report fee. But there are plenty more, ranging from the mortgage insurance fee, closing fee, title examination fee, notary fees, attorney fees and additional costs for such things as hazard insurance and the lender's inspection fee.

These settlement services are all clearly outlined in HUD 1, a document provided by the U.S. Department of Housing and Urban Development. But there's one settlement service that's been left off the list - the Natural Hazard Disclosure report.

I don't understand why NHDs aren't included because these reports can contain some of the most crucial information you'd ever want to know. Consider this: What if you moved into a nice four-bedroom, two-bath home but found out a year later that you were sitting directly atop an earthquake faultline? Or in a high-fire zone? Or what if you learned you were in an area prone to mudslides?

These are the kinds of things NHDs reveal - ahead of time. Needless to say, they can play a BIG part in your decision to buy, or not buy, a home. A legal action last year determined that NHDs in California are, in fact, a settlement service as part of the escrow process and are subject to the Real Estate Settlement Procedures Act (RESPA).

I contacted HUD to get their position:

Are Natural Hazards Reports a settlement Service?

HUD spokesman Brian Sullivan said, "For California it most certainly is a settlement service."

Is HUD enforcing this mandate?

"We believe so,” Sullivan said. “If it’s not, it’s a violation of RESPA.”

But if HUD is enforcing this, why aren't NHDs included in HUD 1 as a settlement service for real estate transactions that occur in California? Sullivan didn't exactly have an answer for that one.

"It's not a requirement across the country," he said. "Just in certain states."

I can not find any communication from HUD that reflects Mr. Sullivan's comments. No mention on HUD 1, no official or un-official communication was posted, not one word in any place. Are these legal requirements posted in a secret drawer that I cannot reach? Is HUD reaching far out of the legal requirements?

I am committed to get to the bottom of this one; I do not believe in legal requirements that are posted on a cloud.