The following scenarios include typical situations that result in unreconciled cases that will appear on the Reconciliation file, available to all lenders between the 15th and 17th day of each month. Accessing and comparing the Portfolio file against your records will help resolve many of these errors. The scenarios are shown with the data provided in a sample report layout. Your exception reporting process may differ from the sample shown here. However, the problems and action required for resolution will be the same.
Reconciliation File/Sample Report Field Descriptions
- Amount Due: Amount billed for the current month.
- Current Charges: Monthly premium, late, and interest assessed for that month.
- Paid/Applied: All payments, refunds, adjustments, and debit vouchers that occurred between the two billing cycles (15th and 15th).
- Past Billed: Amount billed the previous month.
- Unapplied Before Current Bill: Overpayment amount on the case prior to billing.
M20 Non-endorsed Cases
A case with an M20 error code in the Reconciliation report file indicates the case has not yet been endorsed for FHA Insurance. Below are some of the reasons this error may occur and the action to be taken.
Reason 1: Case Is Not Endorsed
Situation: Case 212-1111111 has not been endorsed yet, but the first premium payment due date is June 1. We remitted a $20.00 payment on June 9. It appears in the Reconciliation file for June 17 with an M20 discrepancy type.
| Error | Case Number | Billing and Payment(s) | Premium | Late | Interest | Total |
|---|---|---|---|---|---|---|
| M20 | 212-1111111 | Past Billed (due 6/1) | 0.00 | 0.00 | 0.00 | 0.00 |
| Current Charges | 0.00 | 0.00 | 0.00 | 0.00 | ||
| Paid/Applied | 0.00 | 0.00 | 0.00 | 0.00 | ||
| Amount Due (7/1) | 0.00 | 0.00 | 0.00 | 0.00 | ||
| Unapplied Before Current Bill | 20.00 |
Lender Action: Continue making monthly payments.
Notes:
- Until the case is endorsed, the monthly payments are placed in unapplied funds (and therefore appear in the monthly Reconciliation file with an M20 discrepancy type). When the case is endorsed, bills are generated for the effective periods and the payments are applied to the bills.
- If the case is canceled before endorsement, request a refund or reallocation.
- Case will be recorded as Risk-based and updated at endorsement if necessary.
Reason 2: Discrepancy in the First Premium Payment Due Date
Situation: We compared our records against the Portfolio and Reconciliation files and discovered that for case 212-2222222, our first premium payment due date (Begin Amort Date) is June 1, while HUD's due date is August 1. As a result, we remitted a $20.00 payment on June 9, but the case was not billed. The Reconciliation file for June 17 shows the following:
| Error | Case Number | Billing and Payment(s) | Premium | Late | Interest | Total |
|---|---|---|---|---|---|---|
| M20 | 212-2222222 | Past Billed (due 6/1) | 0.00 | 0.00 | 0.00 | 0.00 |
| Current Charges | 0.00 | 0.00 | 0.00 | 0.00 | ||
| Paid/Applied | 0.00 | 0.00 | 0.00 | 0.00 | ||
| Amount Due (7/1) | 0.00 | 0.00 | 0.00 | 0.00 | ||
| Unapplied Before Current Bill | 20.00 |
Lender Action:
Review the loan documentation.
If our records are incorrect:
- Update our records to reflect the correct first payment due date.
- Leave the $20.00 overage (unapplied amount) on the case to be applied to the future bill or request a refund or reallocation for the non-billed payment.
If HUD's records are incorrect:
- Send copies of the Mortgage Insurance Certificate, HUD-1 Settlement Statement, and the Mortgage Note to the HUD Homeownership Center (HOC) in our area and request that they correct their records.
- Continue paying charges on the case (whether billed or not).
Notes:
- If our records are incorrect and we reallocate the funds or are issued a refund of $20.00 before July 15, the case will not appear in the Reconciliation file for July 17.
- If HUD's records are incorrect and are not changed by July 1, the case will appear in the Reconciliation file for July 17 with an M21 discrepancy type. When HUD's records are updated, bills are generated for the effective periods and the overage (unapplied) is applied to the bills.
See also Reconciliation Discrepancy Types, Discrepancy Type M20: Payment for Non-endorsed Case.