Reconciliation Scenarios: M20 Errors

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The following scenarios include typical situations that result in unreconciled cases that will appear on the Reconciliation file, available to all lenders on the 17th of each month. Accessing and comparing the Portfolio file against your records will help resolve many of these errors. The scenarios are shown with the data provided in a sample report layout. Your exception reporting process may differ from the sample shown here. However, the problems and action required for resolution will be the same.

Reconciliation File/Sample Report Field Descriptions:  

Situation: Case 212-1111111 has not been endorsed yet, but the first premium payment due date is June 1. We remitted a $20.00 payment on June 9. It appears in the Reconciliation file for June 16 with an M20 discrepancy type.

Mortgagee Action:

Continue making monthly payments.

Notes:

Until the case is endorsed, the monthly payments are placed in unapplied funds (and therefore appear in the monthly Reconciliation file with an M20 discrepancy type). When the case is endorsed, bills are generated for the effective periods and the payments are applied to the bills.

If the case is canceled before endorsement, request a refund or reallocation.

Case will be recorded as Risk-based and updated at endorsement if necessary.

Situation: We compared our records against the Portfolio and Reconciliation files and discovered that for case 212-2222222, our first premium payment due date (Begin Amort Date) is June 1, while HUD's due date is August 1. As a result, we remitted a $20.00 payment on June 9, but the case was not billed.

Mortgagee Action:

Review the loan documentation.

If our records are incorrect:

Update our records to reflect the correct first payment due date.

Leave the $20.00 overage (unapplied amount) on the case to be applied to the future bill or request a refund or reallocation for the non-billed payment.

 If HUD's records are incorrect:

Send copies of the Mortgage Insurance Certificate, HUD-1 Settlement Statement, and the Mortgage Note to the HUD Homeownership Center in our area and request that they correct their records.

Continue paying charges on the case (whether billed or not).

Notes:

If our records are incorrect and we reallocate or are issued a refund of $20.00 before July 15, the case will not appear in the Reconciliation file for July 16.

If HUD's records are incorrect and are not changed by July 1, the case will appear in the Reconciliation file for July 16 with an M21 discrepancy type. When HUD's records are updated, bills are generated for the effective periods and the overage (unapplied) is applied to the bills.