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Monthly Premium Reconciliation Scenarios: M21 Errors

The following scenarios include typical situations that result in unreconciled cases that will appear on the Reconciliation file, available to all lenders between the 15th and 17th day 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 

  • Amount Due: Amount billed for the current month.
  • Current Charges: Monthly premium, late, and interest assessed for that month.
  • Paid/Applied: All payments, refunds, adjustments, and debit vouchers that occurred between the two billing cycles (15th and 15th).
  • Past Billed: Amount billed the previous month.
  • Unapplied Before Current Bill: Overpayment amount on the case prior to billing.

M21 Non-billable Cases

A case with an M21 error code in the Reconciliation report file indicates the case is not billable for monthly mortgage insurance premium. Below are some of the reasons this error may occur and the action to be taken.

Reason 1: Discrepancy in Type of Loan (Section of the Act)

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. The Reconciliation file for June 17 shows the following:

Error Case Number Billing and Payment(s) Premium Late Interest Total
M21 212-3333333 Past Billed (due 6/1) 0.00 0.00 0.00 0.00
    Current Charges 0.00 0.00 0.00 0.00
    Paid/Applied 0.00 0.00 0.00 0.00
    Amount Due (7/1) 0.00 0.00 0.00 0.00
    Unapplied Before Current Bill       20.00

Lender 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 17.
  • If HUD's records are incorrect and are not changed by July 1, the case will appear in the Reconciliation file for July 17 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.

Reason 2: Discrepancy in the Exempt Status

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.The Reconciliation file for June 17 shows the following:

Error Case Number Billing and Payment(s) Premium Late Interest Total
M21 212-4444444 Past Billed (due 6/1) 0.00 0.00 0.00 0.00
    Current Charges 0.00 0.00 0.00 0.00
    Paid/Applied 0.00 0.00 0.00 0.00
    Amount Due (7/1) 0.00 0.00 0.00 0.00
    Unapplied Before Current Bill       20.00

Lender 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 17.
  • If HUD's records are incorrect and are not changed by July 1, the case will appear in the Reconciliation file for July 17 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.

See also Reconciliation Discrepancy Types, Discrepancy Type M21: Payment for Non-billable Case.