Reconciliation Scenarios: M21 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: We compared our records against the Portfolio and Reconciliation files and discovered that our records show case 212-3333333 as a Risk-based loan, and HUD's records show it as neither a Risk-based nor a Section 530 loan. We remitted a $20.00 payment on June 9.

Mortgagee Action:

Review the loan documentation.

If our records are incorrect:

Update our records to reflect the correct loan type (Section of the Act).

Request a refund or reallocation of the non-billed payment of $20.00.

If HUD's records are incorrect:

Send a copy of the Mortgage Note to the HUD Homeownership Center (HOC) in our area and request that they correct their records.

Continue making $20.00 payments 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 amount) is applied to the bills.

Situation: We compared our records against the Portfolio and Reconciliation files and discovered that for case 212-4444444, there is a discrepancy in the exempt status. Our records indicate that this loan is not exempt, and HUD's records indicate it is exempt. We remitted a $20.00 payment on June 9.

Mortgagee Action:

Review the loan documentation.

If our records are incorrect:

Review the documentation received from HUD to verify the case number.

Review our loan documentation.

Update our records to show this case is exempt.

Request a refund or reallocation of the non-billed payment of $20.00.

 If HUD's records are incorrect:

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

Continue making $20.00 payments on the case (whether billed or not).

 Notes:

If our records are incorrect, and we reallocate or receive a refund for $20.00 before July 15, this 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.

Case information defaults to: Status = E (non-endorsed); Section of Act = 325 (Risk-based); Cohort Year  = year payment is made. If HUD's records are corrected, this information is updated, if necessary.