Interest Charge Calculation
Interest will be charged on any Single Family monthly (periodic) mortgage insurance premium payment not received by the end of the month in which it was due. Interest will be charged per month based on the number of days in that month. Interest will be billed on past due premium (one or more months late) at the Treasury Value of Funds Rate effective during the billing period. If all past due charges including late and interest charges are received by HUD by the end of the month in which billed, interest will NOT be charged.
The interest formula is the past due premium amount multiplied by the daily interest rate factor (annual interest rate expressed as a decimal divided by 365, rounded to the fourth place to the right of the decimal), multiplied by the number of days in the overdue month (based on number of days in the month - 28, 29, 30 or 31). To get to two decimal places, truncate at the third decimal place and round to the second decimal place.
See additional monthly premiums late and interest charge examples (.pdf).
Questions and answers concerning interest charges are available in the Answers to Mortgagee Questions Premium/Late/Interest section.
See also Premium Calculation and Late Charge Calculation.
Current Value of Funds Rate for Late MIP Payments
When Single Family mortgage insurance premium payments are received late, the Current Value of Funds Rate (CVFR) is used to calculate interest due (I TFM 6-8040.40). Interest charged is simple interest at the rate in effect at the time the debt becomes overdue. The rate of interest remains fixed for the duration of the indebtedness (I TFM 6-8025.20).
The CVFR, effective January 1 of each year, is based on the Treasury Tax and Loan (TT&L) rate for the 12-month period ending the previous September 30, rounded to the nearest whole percent. The rate is published annually in the Federal Register by October 31. The rate is calculated quarterly on a 12-month rolling average of the TT&L rate and is subject to revision only if the published rate changes by 2 percentage points at the close of the prior calendar quarter.
Information on the the current rate is available from the U.S. Department of the Treasury's Financial Management Service (FMS) website at: https://www.fiscal.treasury.gov/reports-statements/cvfr/.
To request additional information regarding Single Family Mortgage Insurance Premiums and the Current Value of Funds Rate, please send an email to HUD's Single Family Insurance Operations Division (SFIOD) at: LenderAssistance@hud.gov.