www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410-8000 July 27, 1987 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Supplemental Mortgagee Letter 87-2 To: ALL APPROVED MORTGAGEES SUBJECT: Corrections Needed for Errors in Reporting on the 90 or More Days Delinquent Loan Report, Single Family Default Monitoring System (SFDMS) We are concerned about the significant number of errors many lenders are making since implementation of the revised Single Family Default Monitoring System (SFDMS) in April 1987. This Mortgagee Letter is to inform you of the most serious and the most common errors being made on the monthly 90 or More Days Delinquent Loan Report since you began reporting on the revised Form HUD-92068-A on April 1, 1987. You no longer receive from HUD a monthly turnaround HUD-92068-B, which displayed our printout of the data you submitted each month on the old HUD- 92068-A, so this letter points out the main areas in which mortgagees are reporting incomplete or inaccurate data. Mortgagee Letter 87-2 , Changes in Reporting Requirements for the Single Family Default Monitoring System (SFDMS), issued January 5, 1987, and the instructions on the back of the revised HUD- 92068-A (dated 12-86) explain the correct procedure for reporting on the form. In addition, we remind you that this monthly report must be submitted by the 5th working day following the end of each month as required in the instructions. Many reports were received late during the first 3 months after initiation of this revised system. We are now tracking late and non-reporting, and will take appropriate administrative action regarding this servicing deficiency if a mortgagee consistently fails to send timely data. Please route this letter promptly to your mortgagee staff directly involved in reporting to the SFDMS and to any firm which you employ to report for you. The information should be used to check your monthly reports and make any necessary corrections of errors in the content or format of the data submitted. We do not intend to issue a regular monthly Mortgagee Letter such as this on reporting errors, as we expect that the quality of reporting by those lenders making errors will rapidly improve. _____________________________________________________________________ 2 Please note that July 1, 1987, was the effective date for the new revised quarterly reporting Form HUD-92068-C (dated 12- 86), Distribution of Insured Mortgages Serviced and Delinquent by HUD Field Office Jurisdiction. All mortgagees were required to submit that form within the first five working days of July for the quarter ending June 30, 1987, and quarterly thereafter, regardless of whether or not any delinquencies exist. That report is designed to check the outstanding loan portfolio as well as the number of delinquencies. Mortgagee Letter 87-2 explained the correct procedure for reporting on that form, also. MOST SERIOUS (FATAL) ERRORS. Three critical data elements must be submitted accurately for each loan reported on the monthly HUD-92068-A, 90 or More Days Delinquent Loan Report. If this data is inaccurate or missing, the entire report for that loan will be automatically rejected by this HUD system. It is rejected because the system must classify delinquent loans by mortgagee and by HUD Field Office with servicing jurisdiction, and must identify case status before the information can be printed in output reports for use by Headquarters and Field Offices. In addition, of course, it is critical that data be submitted only on the new revised Form HUD-92068-A, dated 12-86. Data submitted on the old form or on magnetic tape in the old format cannot be accepted by the new computer system. 1. 10-digit Mortgagee Number. The 10-digit mortgagee number is essential for mortgagee identification, but has not been provided in its field (Columns 1-10) by some mortgagees. It includes the 5-digit mortgagee identification as well as the 5-digit main or branch office identification of the office submitting the data for this report. Any employee handling SFDMS reporting who does not know the correct 10- digit mortgagee number to use, should request it from appropriate staff at its main or branch office. The 10- digit number is used on all applications for FHA-insured loans and on all claims. If the number cannot be obtained from other mortgagee staff, call Bob Harrigan, at (202) 755-0316. Without this identifying number, a mortgagee's entire report is rejected by the system. 2. FHA Case Number (First Digits), Section B. The first 9 numbers of 12-digit FHA Case Numbers have been placed incorrectly in their field (Columns 23-32) by some mortgagees. They must be entered beginning at the left margin of their field, Column 23, or the system enters an erroneous zero in the empty column. Since the first 3 digits of 12 and 13-digit case numbers are the HUD Field Office Code, an erroneous zero in Column 23 results in an invalid or incorrect Field Office designation. This means that the entire case number is invalid and rejected, or it appears with an incorrect case number under the jurisdiction of an incorrect Field Office. _____________________________________________________________________ 3 3. Status of Mortgage, Section M. Some mortgagees are not reporting the status of each delinquent loan by using one of the 9 codes, A through I, listed in the instructions for Column 119 of Section M. The Regulations require a status update and HUD needs the information for our oversight of loans. Without a status code, the entire loan record submitted is rejected by HUD's system. In addition to data loss resulting from errors in these three critical elements, data which is not submitted on time cannot be entered into the system and is, therefore, missing from the output reports and analysis for the month reported. OTHER COMMON ERRORS. When errors are detected for the data elements below, HUD's system does not reject the record, but data fields are incomplete or inaccurate, and complete tabulations cannot be made. 1. Missing Social Security Numbers, Section D and E. Lenders must continue their efforts to provide social security numbers of mortgagor and co-mortgagor for each loan through search of available records and direct contact with mortgagors. In addition, accuracy is extremely important; it appears some lenders are providing incorrect numbers. These numbers are of critical importance to our credit alert system, and are required for credit bureau reporting and payment of claims, also. 2. FHA Case Number (Last Digits), Section B. The last 3- digits of FHA Case Numbers have been reported incorrectly by some mortgagees. They report, in error, the Section of the Act rather than the Section of the Act ADP Code in columns 33-35, the suffix field of the FHA Case Number. For example, code 203 is only 1 of about 70 possible ADP codes which represent mortgages insured pursuant to Section 203 of the National Housing Act. We question the accuracy of a mortgagee's reporting when its entire portfolio of delinquent leans is reported with case numbers ending in 203, especially when there are dozens of cases. We need the Section of the Act ADP Code to provide a specific description of the type of mortgage insured by HUD. The correct FHA Case Number for each loan is recorded in the upper left corner of the Mortgage Insurance Certificate for that loan. The last 3-digits of that number are the Section of the Act ADP Code. _____________________________________________________________________ 4 3. Zip Code Entered Incorrectly, Section J. The 5-digit zip code must be entered beginning at the left margin of the 6- digit field provided. An extra zero must not be entered at the beginning of the zip code though it may be used in the last space of the field. Accurate zip codes are essential for HUD's output reports organized by zip code. 4. Missing Date of First Payment, Section K. Case records should be examined for the date of first payment due under the original mortgage. Only if it is not available, enter the closest substitute such as the closing date or the endorsement date which appears on the Mortgage Insurance Certificate. 5. Date Format. All dates must be reported in the format MMYY. For example, an action occurring in July 1987 must be reported as 0787. Data is not edited before it is keypunched, and must be submitted in proper format. 6. Automated Entry. The magnetic tape blocking specifications were not followed by some mortgagees. We have modified our system to accept tapes blocked from 1 to 128 records. Therefore, mortgagees may now provide data on magnetic tape produced by personal computers if proper specifications are followed: 9 track EBCDIC, unlabeled, blocked from 1 to 128 records; record length is 128 characters (positions 1-125 are data; positions 126-128 are filler). We encourage reporting by magnetic tape if cost-effective for the lender, and will return tapes to mortgagees after we enter them in the system. Telephone inquiries about system automation may be directed to Bill Shaw, Director, Housing Information and Statistics Division, at (202) 755-6190. HUD appreciates your efforts to comply with these reporting requirements and anticipates that all mortgagees will rapidly achieve a high quality of accurate, complete, and timely reporting. Sincerely yours, Thomas T. Demery Assistant Secretary _____________________________________________________________________