Remember the first mortgage you signed for, ... sitting at
the table and looking at all the fees you were charged by
so many different people, just to get your mortgage. It
seems overwhelming. Have you ever noticed that they are
always quick to take your money but v-e-r-y slow when it
comes to providing a refund?
Well here is another example of the slow process, but
worse, it could have slipped through the cracks altogether,
and there are plenty of cracks. This information may seem
confusing and contradicting but it is not intended to be
so. It is the "system". If you are owed a refund it
certainly won't make you rich. It's about the principle
isn't it?
If you had an FHA-insured mortgage, you may be eligible for
a refund from HUD/FHA. Review your settlement papers or
check with your mortgage company to determine if you paid
an up-front premium. You may be eligible for a refund of a
portion of the insurance premium if you: acquired your loan
after September 1, 1983, paid an up-front mortgage
insurance premium at closing and did not default on your
mortgage payments.
There are some common sense Exceptions:
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
up-front 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.
Refunds are based on the number of months the loan is
insured. 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 the 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 new FHA-insured loan, and no
refund is due these homeowners after the third year of
insurance.
Mortgagee Letter 2005-03 provides additional information on
recent policy changes regarding refunds of up-front
mortgage insurance premiums. Simply stated all loans
endorsed after December 8th, 2005 are no entitled to a
refund of UFMIP unless it is an FHA to FHA refinance in
which case the refund is applied towards the new UFMIP.
Cool, Huh?
How are refunds processed?
Your mortgage company notifies HUD of the termination of
the FHA mortgage insurance for your loan. 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 so that you can
provide HUD with additional information about your case.
If you receive a form HUD-27050-B, 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 your completed form HUD-27050-B and the
necessary supporting documentation, this information will
be carefully reviewed. Upon completion of this review, HUD
will either request that Treasury issue a check directly to
you or request additional information from you.
How to follow-up:
If you do not receive a check or 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 to terminate the mortgage insurance on your loan.
If they confirm that the correct termination information
was sent, contact your local HUD office or contact them
through their website. All inquiries should include your
name, your FHA case number, the date that the mortgage was
paid-in-full, the property address, and your daytime phone
number. Remember this too, the rules governing eligibility
for premium refunds are based on the financial status of
the FHA insurance fund and are subject to change.
There you go. Simple isn't it. Like I said it won't make
you rich and probably isn't worth the bother if yours did
slip through the system. A word of comfort, it probably
did not although some do. The reason I have this
information here is so you realize how important it is that
you understand your loan and it's fees. You must ask
questions about anything you are not sure of. Most
important, make sure you are working with a reputable
Mortgage Broker that has the experience and knowledge to
assure that your interests are taken care of.
----------------------------------------------------
Connie Sanders is available to answer any mortgage
questions you have and can be reached from her information
only web sites at http://www.fha-guidelines.com or
http://www.fha-mortgageunderwriters.com
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