www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410-8000 January 5, 1987 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Mortgagee Letter 87-2 TO: ALL APPROVED MORTGAGEES SUBJECT: Changes in Reporting Requirements for the Single Family Default Monitoring System (SFDMS) This Mortgagee Letter is to advise lenders of changes in the monthly and quarterly reporting requirements for the Single Family Default Monitoring System (SFDMS). These changes involve revisions of Forms HUD-92068-A and HUD-92068-C (Form A and Form C), and elimination of HUD-92068-B. The effective date for use of the new revised Form A will be April 1, 1987, for all HUD insured single family mortgages 90 or more days delinquent as of May 31, 1987. July 1, 1987 will be the effective date for the new revised Form C, the summary report of the quarter ending June 30, 1987. Mortgagees must use the new revised forms attached to this letter; only data reported on the revised forms will be accepted by HUD beginning with the effective dates. The SFDMS is based on the requirement in the HUD regulations at 24 CFR 203.332 that each month all approved mortgagees report to HUD all insured mortgages which are 90 or more days delinquent and the status of all mortgages reported 90 or more days delinquent the previous month. The automated system has remained essentially unchanged since it was implemented in 1976. These reporting requirements are assigned OMB approval number 2502-0060. This letter with explanation of the changes should be routed promptly to mortgagee staff directly involved with reporting to the SFDMS, or to firms hired to report for the mortgagee. Forms The two forms to be used in this revised reporting system are attached. 1. HUD-92068-A (Form A) - Single Family Default Monitoring System, 90 or More Days Delinquent Loan Report. Monthly, all mortgagees with HUD accounts 90 or more _____________________________________________________________________ 2 days delinquent must enter and report the status of each of those mortgages on the monthly Form A until they are reported terminated or deleted (paid to less than 90 days delinquent, etc.). 2. HUD-92068-C (Form C) - Single Family Default Monitoring System, Distribution of Insured Mortgages Serviced and Delinquent by HUD Field Office Jurisdiction. Quarterly, all mortgagees must report both the distribution of their entire FHA-insured portfolio, and also the number of any insured accounts 30, 60, or 90 days delinquent. Purpose The changes are being made to: (1) simplify reporting by eliminating the turnaround procedure (the current Form HUD- 92068-B); (2) improve efficiency by limiting data gathered to that most pertinent for program operation and control; (3) provide the credit alert system with the Social Security numbers of mortgagors in default; and (4) speed the time in which data are processed and can be used. The statistics on FHA insurance- in-force and the information on delinquencies and foreclosures in these reports provide an up-to-date account of the status and trends of FHA-insured mortgages. They also provide an indicator of the effectiveness of servicing activities, and the potential risk to the insurance fund. Automated or Manual Entry The system is designed to accept data reported on Form A or Form C in one of three ways: manually; by a mortgagee's computer system onto the forms or an identical format; or by an automated method onto magnetic tape. Punched cards will no longer be accepted. Mortgagees which do not currently report Form A data on magnetic tape are encouraged to do so. HUD requires prior notification to the Computer Management Division (address and telephone on forms) of the intention to change reporting method. The specifications for computerization of data on Form A are contained on the form, and guidance is provided in this letter. The magnetic tape specifications are as follows: 9 track EBCDIC, unlabeled, blocked at 128 records. Records are 128 characters (positions 1-125 are data; positions 126-128 are filler). First Data Entry on Revised Form A The initial changeover to the new reporting system requires that each mortgagee enter on its first revised Form A report, in April, its loans which just became 90 or more days delinquent in March as well as all loans remaining in default which were reported or updated in March on Forms A and B. Any mortgagee which has previously not reported in the SFDMS must begin _____________________________________________________________________ 3 compliance in April by reporting on Form A all its loans 90 or more days in delinquency in March. (In July, it must begin reporting on Form C.) Though the first reporting cycle on the revised Form A in the new system may require an additional effort by each mortgagee to gather social security numbers and due dates of first payment for its outstanding inventory of defaults, future reporting will be less burdensome than the current system. Accuracy Mortgagees must thoroughly study the new reporting forms, the instructions printed on the reverse of the forms, and this Mortgagee Letter, so that an orderly conversion can be accomplished. Staff reporting data should keep this Letter as well as the attached HUD Field Office Codes and Home Mortgage (Section of the Act) ADP Code Chart handy for ready reference. There is pertinent information in this Letter that is not included in the instructions on the forms. There is a high error rate in the current reporting by mortgagees. It is crucial that the data mortgagees enter be accurate, as there will be no turnaround report for HUD to notify lenders of errors, nor HUD staff to correct input. The output reports and analysis will include the data as submitted. Accuracy is even more important now in view of the credit alert lists (see Mortgagee Letter 86-15 , pages 1-2) which HUD plans to maintain through the SFDMS reporting. HUD intends to use infor- mation from these lists to help determine eligibility for future FHA insured loans. Please be particularly careful of the FHA Case Number which has been the source of many errors in the past. Form A has always required and will continue to require the FHA case number for each delinquent loan. On Form C, the required HUD field office codes will be drawn from the prefixes of the 12 or 13- digit FHA Case Number. Lenders can double check their FHA Case Numbers against the numbers recorded in the upper left corners of their Mortgage Insurance Certificates. Sometimes invalid prefixes (the first three digits) or suffixes (the last three digits) have been submitted in 12 and 13-digit numbers. Prefix. The prefix codes represent the various HUD field offices. The large number of these codes occurs from lender option choice of originating office. The prefix codes can be found on the attached list of HUD Field Office Codes. They are organized within region by HUD office of jurisdiction. The Instructions, Form C, contain a list of the most common codes. _____________________________________________________________________ 4 Suffix. The attached Home Mortgage ADP Code Chart lists valid suffix codes. They represent the Section(s) of the Act under which insurance was issued for each home, but are seldom the Sections of the Act themselves. The 8-digit FHA case numbers for cases initiated before January 1, 1962 do not include the same prefix and suffix codes as the 12 and 13-digit numbers and can not be checked against the code lists. They should just be entered on Form A as they appear on the Mortgage Insurance Certificate. On Form C, they must be grouped as unidentified cases. Mortgagees must report the FHA Case Number on Form A in the following format: _______________________ Section B FHA case Number ADP Code ________________ ____ 13 digit number 1231234567 250 ________________ ____ 12 digit number 123123456 303 ________________ ____ 8 digit number 12345678 _____________________ For your information, the 12 and 13-digit FHA case numbers are structured the same way except for an extra check digit in the 10th position of 13-digit numbers. The extra digit follows the middle 6-digit case serial number to indicate its validity. The 13-digit FHA case number is diagrammed below. Complete FHA Case Number: 011 123456 7 229 HUD Field Office Code Number ____ Case Serial Number _______________________ Check Digit (Used in 13-digit numbers only) _____ Section of the Act ADP Code __________________________ ers Form A: New Data Elements or Format 1. 10-Digit Mortgagee Number of the office submitting the form must be used. Different mortgagee numbers were assigned by HUD in 1983 to each mortgagee's main and branch offices. Any mortgagee which does not know its 10-digit number(s) should call Bob Harrigan at (202) 755-0316. _____________________________________________________________________ 5 2. Principal Servicing Office location in addition to the name and address of the main or branch office submitting the form is requested. 3. Mortgagor Name (Section C) must always be entered in order by last name beginning at the left margin of Section C, followed by first and middle initials in their designated columns. Problems have occurred in the past when names were entered in a variety of formats. 4. Social Security Numbers (Sections D and E) of the mortgagor (and co-mortgagor, if applicable) will be used in the credit alert system to identify mortgagors in default. It is very important that social security numbers be entered accurately. In the future, HUD intends that mortgagees call the credit alert system to match proposed mortgagors on new applications against the most current list of mortgagors in default. 5. Due Date of First Payment (Section K) is to be entered for the first payment due under the original mortgage. 6. Status of Mortgage (Section M) in default is reported through the use of 9 codes, along with the date of the action. Some of the servicing and termination information currently required in the current Forms A and B need no longer be provided. Code G has been added in anticipation of a final rule to be issued entitled "Claims Without Conveyance of Title." Do not use this code until the effective date of the new regulation. A Mortgagee Letter will be issued informing you about the regulation and the effective date. The status of each mortgage in default must be reported when it is entered for the first time, and every month thereafter until it is reported as terminated with Code E, F, G, or H, or until it is reported with Code I, to be deleted for one of several reasons. Most delinquencies will be reported the first time with Code A, as we expect lenders to report them as soon as they become 90 days delinquent. Delinquency will seldom be reported the first time as B, Foreclosure Started, except in such circumstance as abandonment of property. 7. Case in Bankruptcy (Section O) should be used to report bankruptcy proceedings which may explain lengthly delays in termination or deletion of a default. _____________________________________________________________________ 6 Form C: New Data Elements or Format The quarterly reporting system using Form C has only minor changes. However, it is emphasized that every approved mortgagee servicing FHA-insured loans should report each quarter on Form C. Even if none of its loans are delinquent 30, 60, or 90 days, it should summarize the distribution of its insured mortgages. The report should be submitted by only one office of each mortgagee for the firm's entire portfolio of FHA-insured loans. 1. 10-Digit Mortgagee Number is to be used. 2. HUD Field Office Code (Column A) is requested instead of the HUD field office name. Accuracy is very important because reports are distributed for use in monitoring to the HUD field offices based on office identification on the forms. Only one 3-digit field office code should be entered on each line of Column A. The proper field office code for each case appears as the first three digits of each 12 or 13-digit FHA case number, so mortgagees should group and enter their 12 and 13-digit FHA cases by their prefix codes. In order to double check the accuracy of the codes submitted, mortgagees should examine the most common codes in the Table of HUD Field Office Codes on the reverse side of Form C and the list of HUD Field Office Codes attached to this letter. They are organized within region by HUD office of jurisdiction. There are multiple codes for many field offices due to lender option choice of originating office; the proper codes for each mortgagee to list on Form C depends on the FHA case number prefix codes in its portfolio. The 8-digit case numbers are an exception to reporting by code because they do not include the same 3-digit prefixes. The printed instructions in Section G for handling them should be followed. 3. Class of Totals (Column B) includes 3 classes of FHA- insured loans in which the number of loans and the number of delinquencies are to be reported quarterly: all mortgages serviced, Section 235 mortgages serviced, and direct endorsement mortgages serviced. These 3 categories are different from the ones used on the current Form C. All mortgagees servicing FHA-insured loans must report in Column C the total number of mortgages they service for each of these classes. 4. Number of Delinquencies by HUD Field Office (Column D, E, and F,) are to be submitted for 30, 60, and 90 or more day delinquencies by the three classes of mortgages. _____________________________________________________________________ 7 Forms: Supply and Submission A copy of each of the new revised forms HUD-92068-A (Form A) and HUD-92068-C (Form C) is attached with this letter. Additional supplies of the new forms will be available at each HUD field office by January 30. Mortgagees may print or reproduce the new form for use and submission to HUD as long as care is taken to copy the complete form. All supplies of the old Forms A, B, and C printed prior to December 1986, should be destroyed concurrent with the effective dates for use of the new Forms A and C respectively. The forms must be submitted by the holding mortgagee or its servicer but not by both. When Form A and Form C are both being submitted in the month following each quarter, mail both forms in a single package. Each form must be submitted to HUD by the 5th working day of the month following the end of the reporting period. Any mortgagee which consistently does not submit its reports by that date will be notified by HUD, and HUD will take appropriate actions if the tardiness persists. Both forms covered by this letter should be mailed to: U.S. Department of Housing and Urban Development Computer Management Division, Room 4238 Washington, DC 20410 Telephone inquiries regarding submission of forms may be directed to the Computer Management Division at (202) 755-5333. If inquiries concern system automation, they should be directed to Bill Shaw, Director, Housing Information and Statistics Division at (202) 755-6190. Questions of a policy nature should be directed to the Single Family Loan Management Branch of the local HUD office in your area. In acknowledgement of the preparation involved to begin reporting with the revised format and data elements on these forms, HUD has provided approximately three months lead time for Form A, and six months for Form C. The revisions will provide a more efficient reporting system with more useful information. HUD appreciates your cooperation in complying with these requirements. Sincerely yours, Thomas T. Demery Assistant Secretary Attachments: Click Here for Form HUD-92068-A Form HUD-92068-C HUD Field Office Codes Home Mortgage ADP Code Chart _____________________________________________________________________