A lot of consumers with FHA home loans have been asking the questions as to whether they are entitled to a refund from the Federal Housing Association. The answer to this may be a “YES”, provided you took out your FHA home loan post 1st September 1983, have been up to date on your FHA home loan payments and paid an upfront amount for your FHA home loan mortgage insurance.
In accordance with the rules laid out by the Department of Housing and Urban Development (2), upfront mortgage insurance of MIP is a requirement on most FHA loans. FHA requires these payments to be submitted to itself within 10 days of the closing or disbursement date, whichever comes last.
Once consumers have paid of their FHA loans they are entitled to receive an FHA refund for a portion of the upfront Mortgage Insurance Payment. This might not be the case in the event that the loan was assumed or was refinanced in an FHA to FHA refinance program. However to fully understand your eligibility it ma be beneficial to keep the following facts in mind:
How Are FHA Home Loan Program Refunds Determined?
Once the loan is terminated the FHA commissioner determines the amount of FHA refund due. FHA Refunds are directly related to the number of months for which the FHA home loan was insured. The following might be useful information:
- FHA home loans which had a closing date prior to January 1st 2001 and were endorsed before 8th December 2004, no refund is due after the 7th year of insurance.
- For an FHA home loan closed on or after January 1st 2001 and endorsed before 8th December 2004, no FHA refund is due after the 5th year of insurance.
- For a loan closed on or after 8th December 2004, no FHA refund is due unless the loan was refinanced and in which case the no refund is due after the third year of insurance.
How Are FHA Government Home Loan Refunds Processed?
Once your mortgage insurance is terminated, the mortgage company will notify HUD of the termination. As a subsequent course of action if you are eligible for an FHA refund, HUD will request the Department of Treasury to issue you a cheque for your refunds amount or will send you an application for a Premier Refund or for a Distributive share payment. This is when you will need to carefully complete the application, notarize it and provide HUD with supporting information and documentation. Once all the information is in order and the application has been closely reviewed, you will either be issued with a cheque from the Department of Treasury or will be requested for more information.
Following Up Your FHA Home Loan Program Refund
If after a period of 45 days of you paying off your FHA home loan, you have not received either an FHA refund or an application from HUD, contact your mortgage company. Ensure that they have sent off all the correct documentation to HUD. If everything has been correctly sent and everything is in order and a period of 120 days have passed and you have received nothing contact the HUD immediately.
This is a bit of information to help you understand and track your FHA refund. In most cases if consumers have any questions or issues with regard to their refunds they should contact HUD on (800) 697 6967 or mail the Department of Housing and Urban Development at P.O.Box 23699, Washington DC 20026-3699.
References:
- How are FHA Refunds Determined? – Federal Housing Association
- FHA Homeowners Fact Sheet – U.S. Department of Housing and Urban Development