www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410-8000 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER March 24, 1986 Mortgagee Letter 86-9 TO: ALL APPROVED MORTGAGEES SUBJECT: Single Family Development - Streamlined Refund Process for Refinance Transactions In Mortgagee Letter 86-4 , instructions were provided for the processing of one-time Mortgage Insurance Premium (MIP) refunds in refinance transactions. In that Letter, HUD required the estimated refund to be subtracted from the existing mortgage balance to avoid having two MIPs in the new mortgage. While this requirement is essential to reduce the Department's risk potential, we recognize that problems may be created for borrowers required to come up with additional funds at closing and, in some instances, mortgagees which may provide a short term loan for the additional funds based on the forthcoming refund, as permitted in the referenced Letter. To minimize the impact of these problems, we are implementing a temporary procedure to expedite refunds and, when applicable, provide for the refund to be paid jointly to the borrower and mortgagee, and mailed to the refinancing mortgagee for credit to the borrower's account. To use the streamlined refund process the refinancing mortgagee must submit a completed REQUEST FOR REFUND ON ONE-TIME MORTGAGE INSURANCE PREMIUM (See attached form) attached to the HUD-27001, Mortgagee's One-Time MIP Transmittal when the premium is remitted for the new mortgage. Otherwise, any MIP refund will be provided using regular HUD procedures, which may take 120 or more days. HUD will use the data requested to identify the old mortgage, compute and verify the refund entitlement, and initiate payment action in accordance with the instructions on the request. Most of the data necessary to complete the refund request is available from the original Mortgage Insurance Certificate (HUD-59100) and the mortgage instrument to be refinanced. AlI of the data provided must be accurate and complete to avoid processing problems, thus ensuring timely payment of the refund. When completing the request for refund please adhere to the guidance/actions listed below: 1. Annotate an "R" for refinance In the right margin of Block 5 of the form HUD-27001. _____________________________________________________________________ 2 2. Use of the streamlined refund process is not available for MIP remitted via wire transfer. Instead, the regular remittance procedure using form HUD-27001 must be used to take advantage of this streamlined process. 3. This process is only available for refinancing of mortgages currently insured by HUD. If you have any questions about the preparation of the attached refund form or the HUD-27001, please call your Single Family One-Time MIP representative. The following telephone numbers for our representatives are broken down by the first five digits of your mortgagee number. Mortgagee Number Range Telephone Numbers for Representatives 00001 - 19999 (202) 755-0662 or 755-5250 20000 - 39999 (202) 755-0613 or 755-5181 40000 - 98000 (202) 426-6595 or 755-5262 We anticipate that this streamlined process will take 60 days from the time the refund and the HUD-27001 are submitted. If you or the mortgagor have a question about the status of the refund after 60 days, please call the Refund Section of the Distributive Shares Branch on (202) 755-5105. In the event that the refund is to be sent directly to the mortgagor, we suggest that you provide them with a copy of the completed refund form and this telephone number to call after 60 days has elapsed. With regard to the processing instructions in Mortgagee Letter 86-4 , certain lenders have assumed that the MIP was paid in cash to avoid the calculation process. Since the vast majority of MIPs have been financed, mortgagees must assume that the MIP was financed and must remove the estimated refund from the mortgage unless the lender is presented with evidence (canceled check, copy of original 2900 application, etc.) that the MIP was paid in cash. That evidence must be submitted to HUD with the insurance endorsement package. Failure to do so may preclude insurance of the mortgage. In conclusion, while this procedure is helpful, it does not address all of your problems. I can assure you that we are working to further facilitate the refund process in the future. Very sincerely yours, Silvio J. DeBartolomeis Acting General Deputy Assistant Secretary Attachment _____________________________________________________________________