Are you entitled to a FHA refund or share?

Written By: Glenn Michaels

You may be eligible for a refund of your mortgage insurance premium if you:
• Acquired your loan after September 1, 1983
• Paid an upfront mortgage insurance premium at closing and
• 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.

Need FHA Training? CLICK HERE: http://www.FHA-Classes.org

Distributive Share: You may be eligible for a share of any excess earnings from the Mutual Mortgage Insurance Fund if you:
• Originated your loan before September 1, 1983
• Paid on your loan for more than seven years and
• Had your FHA insurance terminated 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 premium may be applied toward the upfront premium required for the new loan.

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 determined? For any FHA insured loans with a closing date prior to January 1, 2001, and endorsed before December 8, 2004, no refund is due the homeowner after the end of the seventh year of insurance. For any FHA insured loans closed on or after January 1, 2001 and endorsed before December 8, 2004, no refund is due homeowner after the fifth year of insurance. For FHA insured loans endorsed on or after December 8, 2004, no refund is due the homeowner unless they refinanced to a FHA insured loan, and no refund is due these homeowners after the third year of insurance.

How are refunds processed?

• Your mortgage company notifies HUD of the termination of the mortgage insurance for your loan.

Need FHA Training? CLICK HERE: http://www.FHA-Classes.org

• If you are eligible for a refund, HUD will either request that the Department of the Treasury issue a check directly to you or send you an application for premium refund or Distributive Share Payment (HUD - 27050 -8) so that you can provide HUD with additional information about your case.

• If you receive a form HUD – 27050 – 8) please read and complete the application carefully, sign it, have it notarized, and return it to HUD along with proof that you were the owner of the property at the time that the insurance was terminated.

• After HUD receives you’re completed form HUD – 27050 – 8 and necessary supporting documentation. The information will carefully be reviewed. Upon completion of the review HUD will either request the Treasury to issue a check directly to you or request additional information.


About The Author

Glenn Michaels - As an NAMP® staff writer, Glenn Michaels is a mortgage underwriting instructor for Mortgage Underwriter University (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years. If you're interested in becoming a writer for NAMP®, please email us at: contact@mortgageprocessor.org.


Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.