www.hudclips.org 


U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

November 21, 1990
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 90-41
      TO:  ALL APPROVED MORTGAGEES
      SUBJECT: Mortgagees' obligations in remitting late charges and
                 interest payments for delinquent One-Time Mortgage
                 Insurance Premium (OTMIP) remittances
 
           The purpose of this letter is twofold: (1) to remind all
      mortgagees of their obligation to remit late charges and interest
      payments for delinquent OTMIP remittances, and (2) to inform
      mortgagees of recent enhancements to our OTMIP collection process.
 
      Mortgagee Obligation to Remit Late Charge and Interest Payments
 
           The Department of Housing and Urban Development (HUD)
      receives a number of late OTMIP remittances from mortgagees.  Many
      of these payments are received by HUD more than 15 and 30 days
      after the loan closing date.  HUD's regulations concerning OTMIP
      remittances received by HUD more than 15 days after closing state:
 
          "Payment of One-Time MIP is late if it is not received
           by HUD by the fifteenth day after closing.  Late payment
           shall include a late charge of four percent of the amount of
           the MIP." (24 CFR 203.282(a))
 
           A 4 percent late charge is assessed if the premium payment
      is received by HUD on or after the 16th calendar day after loan
      closing.
 
           Example:
 
                Feb. 1     Loan Closing
 
                Feb. 16    OTMIP received by HUD    No late fee
 
                Feb. 17    OTMIP received by HUD    Late fee due
 
_____________________________________________________________________
                                                                     2
 
    HUD's regulations concerning OTMIP remittances received by
HUD more than 30 days after loan closing state:
 
   "If payment of the MIP is not received by HUD within 30 days
after closing, the mortgagee will be charged additional late
fees until payment is received at an interest rate set in
conformity with the Treasury Fiscal Requirements Manual."
(24 CFR 203.282(b))
 
     If the MIP is received by HUD on or after the 31st calendar
day after the loan closing, there is an assessment of interest
accrued daily beginning with the day of closing and continuing
until the date of HUD's receipt of the payment.  This assessment
of interest is in addition to the 4 percent late charge.
 
     Example:   (assume February has 28 days)
 
         Feb.   1 loan closing
 
         March  3 OTMIP received by HUD      No interest payable
 
         March  4 OTMIP received by HUD      Interest payable from
                                              Feb. 1 until March 4.
 
     The formula for determining the interest payment can be
described as follows:
 
Interest
Payment =   interest rate x(premium amount)   x number of days
            ______________________________      late
                         365
 
     Since the interest rate changes periodically, the Premiums
Telephone Service Center should be contacted for the latest rate
at (703) 235-8117.
 
     Please be advised that neither issuance of a "MIP Paid,
Endorsed Loan" Statement of Account nor the issuance of the
Mortgage Insurance Certificate relieves the mortgagee of the
obligation to pay interest due HUD.
 
     You are reminded of your obligation to include late charges
for OTMIP remittances received by HUD more than 15 days after
closing and interest payments for OTMIP payments more than 30 days
after closing.  Violation of the OTMIP remittance regulations may
serve as grounds for a referral to the Department's Mortgagee
Review Board for administrative sanction under 24 CFR 25.5, which
includes a wide range of action including the withdrawal of
mortgagee approval.
 
_____________________________________________________________________
 
                                                              3
 
    The above mentioned regulations will be strictly enforced in
order to assure that OTMIP payments are received expeditiously by
HUD.
 
Recent Enhancements to OTMIP Collection Process
 
     We implemented two enhancements in order to improve service,
reduce costs, and reduce the incidence of late charge and interest
assessments.
 
     1.  The Single Family Premium Automated Clearing House (ACH)
         process utilizes a microcomputer software application to
         transfer OTMIP remittances to HUD electronically.  This
         allows payments to be received by HUD more expeditiously
         and reduce the incidence of late charge and interest
         assessments.
 
     2.  Telemail/ECHO is a microcomputer application whereby
         statement of account letters are routed through an
         electronic mail system.  This allows statements to reach
         mortgagees in a more timely manner.
 
     For more information concerning the Telemail/ECHO and the use
of ACH, please contact the Premiums Telephone Service Center at
(703) 235-8117.
 
                                 Very sincerely yours,
 
                                 Arthur J. Hill
                                 Acting Assistant Secretary
                                    for Housing-Federal Housing
                                    Commissioner