www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 February 22, 1994 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Mortgagee Letter 94-8 TO: ALL APPROVED MORTGAGEES ATTENTION: SERVICING MANAGERS (Single Family) ORIGINATING MANAGERS (Single Family) SUBJECT: Revised FHA Homeowners Fact Sheet The FHA Homeowners Fact Sheet is currently provided in the Administration of Insured Home Mortgages, HUD Handbook 4330-1 , Appendix 10 - Homeowners Fact Sheet. The purpose of this Mortgagee Letter is to provide you with the revised Homeowners Fact Sheet, form HUD-27050-C, regarding Single Family Mortgage Insurance Premium refunds and distributive shares. The Fact Sheet has been revised to reflect the following changes in legislation and requirements for determining refund eligibility. - Public Law 102-550, October 28, 1992, amends Section 205 (c) of the National Housing Act (12 U.S.C. 1711 (c)), to state that HUD shall not distribute any shares that remain unclaimed 6 years from the date notification was first sent to the last known address of the mortgagor. - Loans terminating on or after January 1, 1994, will be affected by the new refund factors. Refunds are based on the length of time the loan is insured. By the end of the seventh year, all the premium is earned by HUD and no refund is due the borrower. - Processing time has increased from 60 to 120 days after HUD's receipt of the Application for Premium Refund, form HUD-27050-B. - Mortgagees may call (703) 235-8117, Monday through Friday from 8:30 a.m. to 8:30 p.m. (EST) or direct correspondence by mail to DHUD, P.O. Box 23699, Washington, D.C. 20026-3699. _____________________________________________________________________ 2 - A Spanish language statement has been included for the benefit of the Spanish speaking consumer. The interpretation of the statement says "If you speak Spanish and have difficulty reading English, please telephone (703) 235-8117". The Department of Housing and Urban Development requires that you provide the mortgagor with the Fact Sheet at loan origination and again when the mortgage insurance is terminated. All questions pertaining to this Mortgagee Letter should be directed to Delores McDaniels of the Insurance Operations Division, Disbursements Branch, Monday through Friday 8:30 a.m. to 5:00 p.m. on (202) 708-1722. The Department appreciates your assistance and continuing support in providing mortgagors with this information. ____________________________________ Nicolas P. Retsinas Assistant Secretary for Housing - Federal Housing Commissioner Attachment _____________________________________________________________________ FHA Homeowners U.S. Department of Housing Fact Sheet and Urban Development Who May Be Eligible for Premium Refund: You may be eligible for a refund a FHA Refund or Share? of a portion of the insurance premium if you: o acquired your loan after September 1, 1983 o paid an upfront mortgage insurance premium at settlement, and o 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. Distributive Share: You may be eligible for a share of any excess earnings from the Mutual Mortgage Insurance fund if you: o originated your loan before September 1, 1983 o paid on your loan for more than seven years, and o HUD processed your FHA insurance termination 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 old premium may be applied toward the upfront premium required for the new. 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 The FHA Commissioner determines how much premium Determined? is refunded when loans are terminated. Refunds are based on the number of months the loan is insured. For loans terminating on or after January 1, 1994, with insurance in force for 24 months, approximately 80 percent of the premium is refundable; after 48 months, 39 percent; after 72 months, 8 percent. After 83 months (7 years) no refund is due the homeowner. _____________________________________________________________________ How Are Refunds o Mortgage company notifies HUD of insurance Processed? termination o If you are eligible for a refund, HUD sends you an Application for Premium Refund (form HUD-27050-B) o Read the application carefully, sign it, notarize it, and attach proof of ownership o HUD either requests Treasury to issue a check or requests additional information from you. How to Follow-up: If you do not receive 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 for termination. If they confirm that the correct termination information was sent, contact HUD. If you do not receive a refund or any other documentation from HUD within 120 days from the date you mailed your application, contact HUD immediately. How to Contact HUD: by Phone: by Mail: (703) 235-8117 U.S. Department of Housing 8:30 a.m. to and Urban Development 8:30 p.m.(EST) P.O. BOX 23699 Monday through Friday Washington, DC 20026-3699 Note: All inquires should include your name, 10-digit FHA case number, paid-in-full date, property address, and a daytime phone number. Record your FHA case number here ________________ for future reference. SI USTED HABLA ESPANOL Y TIENE DIFICULTAD LEYENDO O HABLANDO INGLES, POR FAVOR LLAME USTED A ESTE NUMERO TELEFONICO ___ (703) 235-8117. ___________________________________________________________________________ Previous Editions are Obsolete form HUD-27050-C (2/94)