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ELIGIBILITY
OF AN FHA PREMIUM REFUND OR SHARE
PREMIUM REFUND:
For someone to be eligible for a refund of a portion of the insurance
premium, they must have:
- Acquired their loan AFTER September 1, 1983
- Paid an up-front mortgage insurance premium at closing and not defaulted
on their mortgage payments.
DISTRIBUTIVE SHARE:
They may be eligible for a share of any excess earnings from the Mutual
Mortgage Insurance fund if they:
- Originated their loan before September 1, 1983
- Paid on their loan for more than seven years, and HUD processed their
FHA insurance termination BEFORE November 5, 1990.
EXCEPTIONS TO THE ABOVE
1. 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.
2. FHA to FHA Refinances:
When an FHA loan is refinanced, the refund from the old premium may be applied toward the up-front premium required for the new loan.
3. Claims:
When a mortgage company submits a claim to HUD for insurance benefits, no refund is due the homeowner.
4. Statute of Limitations:
HUD is not liable for a distributive share that remains unclaimed six years from the date notification was first sent to the last known address of the mortgagor.
The rules governing the eligibility for premium refunds and distributive share payments are based on the financial status of the FHA insurance fund and are subject to change.
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