Fha Mortgage Insurance Premium Refunds - DOC by cuf15159


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									                   U. S. Department of Housing and Urban Development
                                Washington, D.C. 20410-8000

            February 22, 1994
Mortgagee Letter 94-8
       ORIGINATING MANAGERS (Single Family)
SUBJECT: Revised FHA Homeowners Fact Sheet

   The FHA Homeowners Fact Sheet is currently provided in the
Administration of Insured Home Mortgages, HUD Handbook 4330-1 ,
Appendix 10 - Homeowners Fact Sheet.

    The purpose of this Mortgagee Letter is to provide you with
the revised Homeowners Fact Sheet, form HUD-27050-C, regarding
Single Family Mortgage Insurance Premium refunds and distributive
shares. The Fact Sheet has been revised to reflect the following
changes in legislation and requirements for determining refund

   - Public Law 102-550, October 28, 1992, amends Section 205
     (c) of the National Housing Act (12 U.S.C. 1711 (c)), to
     state that HUD shall not distribute any shares that
     remain unclaimed 6 years from the date notification was
     first sent to the last known address of the mortgagor.

   - Loans terminating on or after January 1, 1994, will be
     affected by the new refund factors. Refunds are based on
     the length of time the loan is insured. By the end of the
     seventh year, all the premium is earned by HUD and no
     refund is due the borrower.

   - Processing time has increased from 60 to 120 days after
     HUD's receipt of the Application for Premium Refund, form

   - Mortgagees may call (703) 235-8117, Monday through Friday
     from 8:30 a.m. to 8:30 p.m. (EST) or direct correspondence
     by mail to DHUD, P.O. Box 23699, Washington, D.C.


   - A Spanish language statement has been included for the
     benefit of the Spanish speaking consumer. The
     interpretation of the statement says "If you speak Spanish
     and have difficulty reading English, please telephone
     (703) 235-8117".

    The Department of Housing and Urban Development requires
that you provide the mortgagor with the Fact Sheet at loan
origination and again when the mortgage insurance is terminated.

    All questions pertaining to this Mortgagee Letter should be
directed to Delores McDaniels of the Insurance Operations
Division, Disbursements Branch, Monday through Friday 8:30 a.m.
to 5:00 p.m. on (202) 708-1722.

   The Department appreciates your assistance and continuing
support in providing mortgagors with this information.

Nicolas P. Retsinas
Assistant Secretary for Housing
- Federal Housing Commissioner



FHA Homeowners          U.S. Department of Housing
Fact Sheet          and Urban Development

Who May Be Eligible for Premium Refund: You may be eligible for a refund
a FHA Refund or Share? of a portion of the insurance premium if you:

                o acquired your loan after September 1, 1983
                o paid an upfront mortgage insurance premium at
                  settlement, and
                o did not default on your mortgage payments.
                Review your settlement papers or check with your
                mortgage company to determine if you paid an
                upfront premium.

                Distributive Share: You may be eligible for a
                share of any excess earnings from the Mutual
                Mortgage Insurance fund if you:

                o originated your loan before September 1, 1983
                o paid on your loan for more than seven years,
                o HUD processed your FHA insurance termination
                  before November 5, 1990.
Exceptions:           Assumptions: When an FHA insured loan is assumed,
                  the insurance remains in force (the seller
                  receives no refund). The owner(s) of the property
                  at the time the insurance is terminated is
                  entitled to any refund.

                  FHA to FHA Refinances: When an FHA loan is
                  refinanced, the refund from the old premium may be
                  applied toward the upfront premium required for
                  the new.

                  Claims: When a mortgage company submits a claim
                  to HUD for insurance benefits, no refund is due
                  the homeowner.

                  Statute of Limitations: HUD is not liable for a
                  distributive share that remains unclaimed 6 years
                  from the date notification was first sent to the
                  last known address of the mortgagor.

How Are Refunds           The FHA Commissioner determines how much premium
Determined?             is refunded when loans are terminated. Refunds
                  are based on the number of months the loan is
                  insured. For loans terminating on or after
                  January 1, 1994, with insurance in force for 24
                  months, approximately 80 percent of the premium
                  is refundable; after 48 months, 39 percent; after
                  72 months, 8 percent. After 83 months (7 years)
                  no refund is due the homeowner.


How Are Refunds          o Mortgage company notifies HUD of insurance
Processed?              termination
                  o If you are eligible for a refund, HUD sends you
                    an Application for Premium Refund (form
                  o Read the application carefully, sign it,
                    notarize it, and attach proof of ownership
                  o HUD either requests Treasury to issue a check
                    or requests additional information from you.

How to Follow-up:     If you do not receive an application within 45
                days after you have paid off your loan, check
                with your mortgage company to confirm that they
                have sent HUD a request for termination. If they
                confirm that the correct termination information
                was sent, contact HUD.

                  If you do not receive a refund or any other
                  documentation from HUD within 120 days from the
                 date you mailed your application, contact HUD

How to Contact HUD:    by Phone:           by Mail:
                (703) 235-8117       U.S. Department of Housing
                8:30 a.m. to       and Urban Development
                8:30 p.m.(EST)       P.O. BOX 23699
                Monday through Friday Washington, DC 20026-3699

                 Note: All inquires should include your name,
                 10-digit FHA case number, paid-in-full date,
                 property address, and a daytime phone number.

                 Record your FHA case number here ________________
                 for future reference.

                 NUMERO TELEFONICO ___ (703) 235-8117.

Previous Editions are Obsolete              form HUD-27050-C (2/94)

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