FHA Single Family Insurance Claims Accounts Receivable Subsystem (ARS) Remittances

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Background

Single Family Insurance Claims Accounts Receivable Subsystem (ARS) remittances are to be submitted to HUD using the U.S. Department of the Treasury's Pay.gov collection service. Pay.gov was developed to meet the commitment of the United States federal government and the U.S. Department of the Treasury's Financial Management Service to process collections electronically using Internet technologies. Pay.gov satisfies the demands of agencies and consumers for electronic alternatives by providing the ability to complete forms, make remittances, and submit queries 24 hours a day electronically. Launched in October 2000, Pay.gov is a secure government-wide collection portal. The application is Web-based, allowing customers to access their accounts from any computer with Internet access. Pay.gov provides a suite of services allowing users to make remittances to federal agencies in an efficient and timely manner. Additional information is available on the website Pay.gov.

HUD's Single Family Insurance Claims Accounts Receivable Subsystem (ARS) remittance processes are being modified to comply with the U.S. Department of the Treasury's mandate to discontinue the use of outside lockbox services and switch to the Treasury's Pay.gov collection service. Implementation and conversion for the FHA Single Family Insurance Claims Accounts Receivable Subsystem are anticipated to occur by early 2011.

Remittance Processing Time

All remittances (online or batch) that are fully received between 7:00 a.m. and 8:00 p.m. EST on a business day are included in the processing for that business day and will be posted the following day. Any remittance received after 8:00 p.m. or on a non-business day (Saturday, Sunday, or federal holiday), will be accepted and held for processing until the next business day. Furthermore, transactions entered through the FHA Connection after 8:00 pm of the third to last business day of the month through the end of the month, will not be posted to the Accounts Receivable Subsystem until the first business day of the following month (e.g., for the month ending 9/30/10, any transaction submitted after 8 pm on 9/27/10 and before 8:00pm on 9/30/10 will be posted to ARS 10/1/10). Lenders are encouraged to process remittances early to avoid penalties as a result of transmission problems.

No Check Re-Presentments

ACH items will not be re-presented for collection due to insufficient funds. If HUD fails to collect remittances the first time, the remittance shows a "Failed" status. Lenders are advised to check their remittance history screen for remittances that require correction and resubmission. A notification will not be automatically generated.

HUD's Web-based FHA Single Family Insurance Claims Accounts Receivable Subsystem (ARS) Remittance Application

Collections posted to the Accounts Receivable Subsystem (ARS) are the result of various events such as when lenders' self-audits uncover funds that were over claimed, when re-conveyances are requested by Single Family HOC/M&M contractors, and when the amount in a mortgagee's escrow account for the mortgagor exceeds the expenses claimed by the lender. Collections posted to the ARS may also be lender remittances for findings discovered by our Post Claim Review Auditor. If a remittance is not received from a lender within 90 days, the receivable is offset against subsequent claims by the lender until the receivable is satisfied. If a receivable is not satisfied within 120 - 150 days, it is referred to the Generic Debt Collection Center in Albany, NY, for enforced collection actions and the lender may be referred to the Mortgagee Review Board. Implementation of Pay.gov will replace the manual lockbox process currently used, and allow for the expeditious processing of transactions. We would like to note that it is of utmost importance during submission of a remittance that special attention is paid to the reason code selection. Furthermore, although contact information is collected during the Cash Flow Account Setup, it is also collected from the transmitter on a transmission-by-transmission basis for correspondence regarding the specific transmittal.

Cash Flow Account Setup

In order to use the new Single Family Insurance Claims Accounts Receivable Subsystem (ARS) remittance process, lenders have two options for entering their banking information depending on the frequency of use. Lenders making recurring remittances can provide their Cash Flow Account information, designating which bank account will be used to withdraw funds, and proceed through the pre-notification process. The pre-notification process takes seven days, thus the lender's banking information will be available for use the eighth day after the cash flow setup has been initiated. A feature allowing lenders with existing bank account information on file, i.e. due to a previously implemented Cash Flow Setup for use in paying Upfront and Monthly Premiums, to use the same banking information in creating the Single Family Insurance Claims Accounts Receivable Subsystem (ARS) Remittance Cash Flow Setup is currently being addressed. Use of this function will eliminate the approval period during which testing of the account and routing information with Treasury occurs. This facet of remittance process will not available at the time of initial implementation in early 2011, but will be available shortly thereafter. Alternatively, lenders can opt not to set up a Cash Flow Account and supply their banking information for each transmission. The Cash Flow Account Setup module of the FHA Connection has further instructions.

Cash Flow Account Setup can be accessed through HUD's FHA Connection website, located within the Lender Functions menu (which is accessed via the FHA Connection's main menu). An employee of a lender without access to FHA Connection or its applications, such as Cash Flow Account Setup, must complete a registration form to obtain an FHA Connection user ID. Once a lender's employee has an FHA Connection user ID, the employee is granted authorization to use Cash Flow Account Setup by the lender's FHA Connection Application Coordinator. This authorization is located in the Lender Approval section of the FHA Connection ID Administration page used by the Application Coordinator. The FHA Connection Registration Procedures module of the FHA Connection Guide has further instructions on attaining access.

Prenotification (Prenote) Process

Once the cash flow account information is entered, HUD will initiate a prenote test to validate the account information provided and verify the ability to perform an electronic Automated Clearing House (ACH) withdrawal from the specified account. The first electronic funds transfer (EFT) remittance can be made eighth business days after initiation of the prenote, assuming no errors are reported. The prenote test period begins the next business day after the cash flow account is set up. A lender can use the Cash Flow Account Setup on HUD's FHA Connection website to determine the status of the prenote test and the date the account becomes active if no errors are reported. If there is an error, Cash Flow Account Setup provides the details. The Lender must address any checking account issues with its bank. HUD only accepts remittances from business checking accounts. On the FHA Connection, the Cash Flow Account Setup module of the FHA Connection Guide and the online help for Cash Flow Account Setup provide additional details.

Security

Bank account information provided during the one-time cash flow account setup is encrypted using the Triple DES encryption standard and stored in a database with access limited to authorized support personnel. All bank account data is stored in HUD's databases only. The remittance information is transmitted securely to the U.S. Department of the Treasury's Pay.gov system for collection processing. Data security is controlled by HUD's strict Automated Data Processing (ADP) security policies. All HUD technical support personnel are required to undergo background investigation. FHA Connection security policies are followed for user access to the Cash Flow Account Setup function and the online FHA Connection Single Family Insurance Claims Accounts Receivable Subsystem (ARS) remittance process. FHA Connection Application Coordinators are required to provide other users within their lending institutions access to these functions, if appropriate.

Questions and Comments

Please email HUD with any questions or comments you may have about the Single Family Insurance Claims Accounts Receivable Subsystem (ARS) Remittance process.