www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

August 13, 1992
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
MORTGAGEE LETTER  92-26
    TO:  ALL APPROVED MORTGAGEES
    ATTENTION:  SERVICING MANAGERS (SINGLE FAMILY)
    SUBJECT:  Prompt Remittance of Mortgage Insurance Premiums (MIPs)
 
         The Department is aware that some mortgagees are not
    remitting up-front and periodic Mortgage Insurance Premiums
    (MIPs) within the time frames as required by HUD's regulations.
    In addition, the Department has also been informed that some
    mortgagees improperly use MIPs to pay operating expenses.  When
    a mortgagee fails to send up-front MIPs to HUD, or misuses MIPs
    mortgagors do not have FHA-insured mortgages despite the fact
    that they have, in many cases, borrowed the funds for the
    up-front MIPs.  Since the Department will not insure a mortgage
    unless up-front MIP has been paid, investing mortgagees that
    purchase the uninsured mortgages do so at their own risk.
    Mortgagees may inquire through CLAS to determine, for example, if a
    mortgage has been endorsed or if MIPs are due (Mortgagee Letter
    92-10, Single Family Loan Production-Enhancement to CLAS, dated
    March 24, 1992).
 
         The purpose of this Mortgagee Letter is to emphasize to
    mortgagees that failure to send both up-front and periodic MIPs
    in accordance with HUD regulations is a very serious matter and
    is in violation of those regulations.  Such failure is also a
    violation of the mortgagee's application for approval, and is
    deemed by the Department to be an improper business practice and
    a breach of the mortgagee's fiduciary duties.  Administrative
    sanctions may be imposed against a mortgagee by HUD if information
    is obtained that a mortgagee has failed to remit MIPs to
    HUD in accordance with the regulations.  In addition, debarment
    actions may be instituted against all individuals responsible
    for the improper use of MIPs.
 
         Mortgagees are reminded that periodic MIPs must be placed
    into an escrow account from the time they are received until
    forwarded to HUD.  Mortgagees are also reminded that up-front
    MIPs must be placed in an escrow account pending remittance to
    HUD if the MIPs are not immediately sent to HUD after the
    closing.
 
_____________________________________________________________________
                                                                      2
 
     Questions concerning this requirement should be directed to the
Headquarters Insured Servicing Branch at (202) 708-1719.
 
                           Sincerely yours,
 
                           Arthur J. Hill
                           Assistant Secretary for Housing
                             - Federal Housing Commissioner
 
                    *U.S. Government Printing Office: 1992 - 312-218/60246