The Government May Owe You a Refund on Your FHA Mortgage Insurance

If you took out an FHA loan between September 1, 1983 and December 8, 2004, the government could owe you money. All FHA mortgage loans require an up-front payment of mortgage insurance premiums so if you default on the loan, the lender doesn’t get stuck with the debt. At one time, and under certain conditions, the federal government was authorized to pay back extra interest from loans that were terminated early. In 2005, President George Bush signed a law into effect that stopped the refund of premiums on all FHA loans begun after December 8, 2004. Of course that does not apply to the earlier loans, and refunds are still given to people who refinance to another FHA loan.

You may be eligible for the refund
• If you got your mortgage after September 1, 1983
• If you paid an up-front mortgage insurance at closing
• If you did not default on mortgage payments

You may also be eligible to receive a distributive share, which is the excess earnings from the Mutual Mortgage Insurance Fund,

• If you took out the loan after September 1, 1983
• If you paid on the loan for at least 7 years
• Had FHA insurance terminated before November 5, 1990

There are exceptions to the eligibility. If your FHA mortgage is assumed by a buyer, you are not eligible for refund. The insurance remains in force on the mortgage. Also, if you sell your home to another FHA borrower, the refund goes toward the up-front insurance premium on the new loan. When your mortgage company submits a claim, the homeowner gets no refund. Concerning distributive shares, if you have not replied within six years of receiving notice of the share, you forfeit the money.

It sounds complicated, but this is the way the refunds are determined. If your closing date was before January 1, 2001, and the loan was endorsed before December 8, 2004, you do not qualify for a refund after the end of the seventh year of insurance. For loans originating after January 1, 2001 and endorsed before December 8, 2004, no refund is due after five years of insurance. If you got your loan after December 8, 2004, you do not qualify for the refund unless you refinance to another FHA loan.

When the insurance on your loan is terminated, your mortgage company will notify HUD. If you qualify for a refund, HUD will send you a check for the amount. If they need more information to process the claim, they will send an Application for Premium Refund or Distributive Share Payment. The application should be completed as quickly and completely as possible, notarized and returned to HUD along with proof that you were the owner of the property when the insurance was terminated. When they receive the completed application, HUD will review it and then request that a check be sent or ask for yet more information from you.
IF you have not received a check, or an application within 45 days, it is imperative to contact your mortgage company to make sure they sent in the claim. If you hear nothing from HUD within 120 days, contact HUD immediately.

• By phone at (800) 697-6967 between the hours of 8:30 am and 8:30 pm Monday through Friday
• By mail at US Dept. of Housing and Urban Development, PO Box 44370, Washington, DC, 20026-4372

Be sure to include your name, your FHA case number, the date the mortgage was pain in full, the address of the property and a daytime phone number where you can be reached.
If you are owed a refund, it is good news. Criminals think so too. If you receive any communication suggesting you need to refinance your home through a third party, or pay a fee to get your refund, disregard them. Your best source of information is FHA. Call them for information or write to the address above.

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