www.hudclips.org 


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

June 18, 1991
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
MORTGAGEE LETTER 91-28
 TO:  ALL APPROVED MORTGAGEES
 SUBJECT:  Participation in the Automated Clearing House Program for Paying
             Up-front Single Family Mortgage Insurance Premiums
 
      In August 1985, the Department of Housing and Urban Development (HUD)
 implemented the Automated Clearing House (ACH) program for the remittance
 of Up-front Mortgage Insurance Premiums.  The ACH program is designed to
 provide FHA approved lenders the opportunity to utilize their mainframe
 and personal computers to electronically authorize the payment of Up-front
 Mortgage Insurance Premiums instead of sending checks and form HUD-27001s
 by mail.
 
      ACH provides lenders with numerous tangible benefits that may reduce
 servicing costs.  Through the use of ACH lenders may:
 
      - Utilize new capability of submitting refinanced cases.
      - Eliminate late charges and interest penalties.
      - Decrease keypunching errors.
      - Eliminate lost mail.
      - Improve turnaround time for receipt of Statement of Accounts.
      - Correct payment data.
 
      Currently over 32 percent of our collections are received through the
 ACH program.  Responding to the needs of our clients, beginning in August,
 Up-front Premiums for refinance cases may be remitted through ACH,
 providing lenders the same capability that is currently operating in
 support of regular Upfront Premium Payments.
 
      We view ACH as a benefit for the Department and for mortgage lenders.
 Consequently, HUD is exploring the possibility of making ACH the sole
 method for collecting the up-front portion of Single Family Insurance
 Premiums.  We will be publishing a notice of this new requirement in the
 Federal Register in the near future.  In the meantime however, HUD
 representatives will begin contacting lenders to discuss the program and
 sign up participants.
 
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     Lenders who wish to sign up early, avoiding a last minute rush, or who
require additional information and procedures, may contact the Single
Family Insurance Operations Division on (703) 235-8117.
 
     ACH is another example of the Department's commitment to provide
better service for our clients.
 
                                     Very sincerely yours,
 
                                     Arthur J. Hill
                                     Assistant Secretary for
                                       Housing-Federal Housing Commissioner