For Single Family monthly (periodic) mortgage insurance premium, a four percent (4%) late charge is assessed on:
- Any amount of current premium owed that is unpaid by the 11th day of the current month. Current premium owed is premium that was billed in the prior month and is due by the first day of the current month (with a ten-day grace period).
Note: If the 10th day of the month occurs on a weekend or holiday, payment must be received before 8:00 p.m. ET on the last business day prior to the 10th day. For example, if the 10th day is on a Sunday, the payment must be received before 8:00 p.m. ET on Friday, the 8th day, to avoid a late charge. - Any premium outstanding at the time of billing as a result of a transaction removing money from the case (e.g., refund, reallocation, or debit voucher).
The late charge formula is the unpaid premium amount multiplied by four percent. To get to two decimal places, truncate at the third decimal place and round to the second decimal place.
Example 1:
FHA Case Number 123-4567890 was billed $20.88 of premium on June 15, due July 1. No payment was remitted. On July 15, a late charge of $ .84 was billed. The calculation was as follows.
| Step | Calculation |
|---|---|
| Multiply unpaid premium by four percent | $20.88 * .04 = .8352 |
| Truncate at 3rd decimal place | .835 |
| Round to 2nd decimal place | .84 |
Example 2:
FHA Case Number 234-5678901 was billed $19.36 of premium on June 15, due July 1. A payment of $11.00 was remitted on July 3, leaving a balance due of $8.36. On July 15, a late charge of $ .33 was billed. The calculation was as follows.
| Step | Calculation |
|---|---|
| Multiply unpaid premium by four percent | $8.36 * .04 = .3344 |
| Truncate at 3rd decimal place | .334 |
| Round to 2nd decimal place | .33 |
Example 3:
FHA Case Number 345-6789012 was billed $24.77 of premium on June 15, due July 1. A payment of $24.77 was remitted on July 3. However, on July 12, a debit voucher was processed against the payment due to insufficient funds. On July 15, a late charge of $ .99 was billed. The calculation was as follows.
| Step | Calculation |
|---|---|
| Multiply unpaid premium by four percent | $24.77 * .04 = .9908 |
| Truncate at 3rd decimal place | .990 |
| Round to 2nd decimal place | .99/td> |
Example 4:
FHA Case Number 456-7890123 was billed $25.00 of premium on June 15, due July 1. No payment was remitted. On July 15, a late charge of $1.00 was billed. The calculation was as follows.
| Step | Calculation |
|---|---|
| Multiply unpaid premium by four percent | $25.00 * .04 = 1.0000 |
| Truncate at 3rd decimal place | 1.000 |
| 1.00 |
For the same FHA Case Number, 456-7890123, another $25.00 of premium was assessed on July 15, due August 1. The total bill on July 15 included $50.00 of premium and $1.00 of late charge.
| Bill Date | Premium | Late Charge |
|---|---|---|
| July 15 Billed Amount | $50.00 | $1.00 |
No payment was remitted. On August 15, another late charge of $1.00 was assessed for the $25.00 of premium that was assessed in the previous month and not paid. The calculation was as follows.
| Step | Calculation |
|---|---|
| Multiply unpaid premium by four percent | $25.00 * .04 = 1.0000 |
| Truncate at 3rd decimal place | <1.000 |
| Round to 2nd decimal place | 1.00 |
The total amount of late charge billed on August 15 was $2.00: $1.00 from the July 15 bill that was not paid, and $1.00 assessed on the August 15 bill.
| Bill Date | Premium | Late Charge |
|---|---|---|
| August 15 Billed Amount | $75.00 | $2.00 |
See additional Single Family Premium Collection Subsystem-Periodic Late and Interest Charge Examples (.pdf).
Questions and answers concerning late charges are available in the Answers to Mortgagee Questions Premium/Late/Interest section.
See also Premium Calculation and Interest Calculation.