Questions and Answers

What is a reallocation?

A reallocation is the redistribution of funds from one case to one or more other cases.

What are the valid reasons for a reallocation?

The established criteria for HUD to approve a reallocation from a case, include:

• R001 - Overpayment
• R002 - Overages due to a late/interest adjustment
• R003 - Payment remitted for wrong case
• R004 - Case is canceled (not endorsed)
• R005 - Payment made on a sold case
• R006 - Payment made on a non-Periodic case
• R007 - Other legitimate reasons not listed
• R008 - Payment made for an invalid case number
• R009 - Payment made for terminated case

A reallocation can also be processed for other legitimate reasons not listed above (R007).

How do I request a reallocation of funds?

Send an email request to HUD's Single Family Insurance Operations Branch, Lender Assistance Section with an attached spreadsheet file containing the details of the reallocation. The FHA ID of the mortgagee and the word "Periodic" must be entered in the subject line of the email message. The following information is required for each request and must be included in the spreadsheet file attached to the email message:

• FHA ID, name, and address of the mortgagee
• Mortgagee contact name and telephone number (and/or fax number)
• FHA case number money is to be reallocated from
• FHA case number(s) money is to be reallocated to
• Amount to be reallocated to each case
• Reason for the reallocation (use an R00n code listed above)
• Date payment was remitted or error occurred

Documentation supporting the reallocation must be submitted upon request.

Use the template spreadsheet file provided by HUD, which is in Microsoft® Excel® format (.xls). More than one reallocation request can be entered on the spreadsheet.

1. Download the template and save it in a location on your computer you can remember.
    
2. Open the template file in Excel® (or other compatible software) and save it under a different file name (i.e., mortgagee ID and date).
    
3. Enter the necessary information for a reallocation request. See the sample below.
    
4. Save the file and attach it to the email request for a reallocation.

Below is a sample of the reallocation request spreadsheet. Three reallocation requests are included in this sample. Note: If the reason for the reallocation is R007 (Other), a full explanation must be included.

Who can I contact for help with reallocation?

Send an email message to HUD's Single Family Insurance Operations Branch, Lender Assistance Section.

How can I determine if my reallocation request has been processed?

The Reallocation Transactions report file lists cases in your portfolio from or to which funds have been reallocated. Also, the Billing and Reconciliation report files show a change in the cases affected by the reallocation. These reports are available through the FHA Connection or the Alternate Report Retrieval process (i.e., secure file transfer process). 

Do I have to be the servicer of a case to reallocate funds from it?

No. If you made a payment in error to a case that was not in your portfolio, you can request a reallocation to the appropriate case.

Is a servicer change processed if funds are reallocated to a case that is not in our portfolio?

No.

How will I know if another servicer reallocates funds from or to a case in our portfolio?

The Reallocation Transactions report file lists cases in your portfolio from or to which funds have been reallocated. Also, the Billing and Reconciliation report files show a change in the cases affected by the reallocation. These reports are available through the FHA Connection or the Alternate Report Retrieval process (i.e., secure file transfer process). 

How can I cancel or change a reallocation request?

Once processed, a reallocation transaction cannot be canceled. It is reversed or changed by processing another reallocation transaction to redistribute the appropriate funds to the appropriate cases. Send another email request to HUD's Single Family Insurance Operations Branch.

Can I reallocate funds to more than one case?

There is no limit to the number of cases funds can be reallocated to as long as there is enough available money on the case(s) from which funds are being reallocated.

Is there a limit to how much I can reallocate from a case?

The only limitation is the amount of money available on the case from which funds are being reallocated. The amount available includes all payments that have passed a 7-day holding period and any funds not being held for the processing of an authorized refund.

Do I have to reallocate the exact payment amount?

No. Specific payments are not reallocated. All or part of the total amount of funds available on a case can be reallocated.

Can I reallocate funds from several different cases to the same case?

Yes. However, you must provide a reason for the reallocation from each case.

Can I reallocate part of the funds from a case and request a refund for the remaining amount?

Yes. However, two separate requests must be submitted, one to the Single Family Insurance Operations Branch for a reallocation, and another to the Disbursements and Customer Service Branch for a refund.

Can I reallocate funds to a non-endorsed case?

Yes. The Single Family Premium Collection Subsystem-Periodic has been changed to accommodate reallocating to any valid non-endorsed case.