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**U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT**

WASHINGTON, D. C. 20410-8000

July 27, 1987

OFFICE OF THE ASSISTANT SECRETARY FOR

HOUSING-FEDERAL HOUSING COMMISSIONER

**Supplemental Mortgagee Letter 87-2**

To: ALL APPROVED MORTGAGEES

**SUBJECT:** Corrections Needed for Errors in Reporting on

the 90 or More Days Delinquent Loan Report, Single

Family Default Monitoring System (SFDMS)

We are concerned about the significant number of errors

many lenders are making since implementation of the revised

Single Family Default Monitoring System (SFDMS) in April 1987.

This Mortgagee Letter is to inform you of the most serious and

the most common errors being made on the monthly 90 or More Days

Delinquent Loan Report since you began reporting on the revised

Form
[[HUD-92068-A]{.underline}](http://www.hudclips.org/sub_nonhud/cgi/pdfforms/92068-a.pdf)
on April 1, 1987. You no longer receive from

HUD a monthly turnaround HUD-92068-B, which displayed our

printout of the data you submitted each month on the old HUD-

[[92068-A]{.underline}](http://www.hudclips.org/sub_nonhud/cgi/pdfforms/92068-a.pdf),
so this letter points out the main areas in which

mortgagees are reporting incomplete or inaccurate data.

[[Mortgagee Letter
87-2]{.underline}](http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi?d=MLET&s1=87-2%5Bno%5D&SECT1=TXTHLB&SECT5=MLET&u=./hudclips.cgi&p=1&r=1&f=G)
, Changes in Reporting Requirements for the

Single Family Default Monitoring System (SFDMS), issued January

5, 1987, and the instructions on the back of the revised HUD-

[[92068-A]{.underline}](http://www.hudclips.org/sub_nonhud/cgi/pdfforms/92068-a.pdf)
(dated 12-86) explain the correct procedure for

reporting on the form.

In addition, we remind you that this monthly report must be

submitted by the 5th working day following the end of each month

as required in the instructions. Many reports were received

late during the first 3 months after initiation of this revised

system. We are now tracking late and non-reporting, and will

take appropriate administrative action regarding this servicing

deficiency if a mortgagee consistently fails to send timely

data.

Please route this letter promptly to your mortgagee staff

directly involved in reporting to the SFDMS and to any firm

which you employ to report for you. The information should be

used to check your monthly reports and make any necessary

corrections of errors in the content or format of the data

submitted. We do not intend to issue a regular monthly

Mortgagee Letter such as this on reporting errors, as we expect

that the quality of reporting by those lenders making errors

will rapidly improve.

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Please note that July 1, 1987, was the effective date for

the new revised quarterly reporting Form
[[HUD-92068-C]{.underline}](http://www.hudclips.org/sub_nonhud/cgi/pdfforms/92068-c.pdf)
(dated 12-

86), Distribution of Insured Mortgages Serviced and Delinquent

by HUD Field Office Jurisdiction. All mortgagees were required

to submit that form within the first five working days of July

for the quarter ending June 30, 1987, and quarterly thereafter,

regardless of whether or not any delinquencies exist. That

report is designed to check the outstanding loan portfolio as

well as the number of delinquencies. Mortgagee Letter 87-2

explained the correct procedure for reporting on that form,

also.

MOST SERIOUS (FATAL) ERRORS. Three critical data elements

must be submitted accurately for each loan reported on the

monthly
[[HUD-92068-A]{.underline}](http://www.hudclips.org/sub_nonhud/cgi/pdfforms/92068-a.pdf),
90 or More Days Delinquent Loan Report. If

this data is inaccurate or missing, the entire report for that

loan will be automatically rejected by this HUD system. It is

rejected because the system must classify delinquent loans by

mortgagee and by HUD Field Office with servicing jurisdiction,

and must identify case status before the information can be

printed in output reports for use by Headquarters and Field

Offices. In addition, of course, it is critical that data be

submitted only on the new revised Form
[[HUD-92068-A]{.underline}](http://www.hudclips.org/sub_nonhud/cgi/pdfforms/92068-a.pdf),
dated 12-86.

Data submitted on the old form or on magnetic tape in the old

format cannot be accepted by the new computer system.

1\. 10-digit Mortgagee Number. The 10-digit mortgagee number

is essential for mortgagee identification, but has not been

provided in its field (Columns 1-10) by some mortgagees.

It includes the 5-digit mortgagee identification as well as

the 5-digit main or branch office identification of the

office submitting the data for this report. Any employee

handling SFDMS reporting who does not know the correct 10-

digit mortgagee number to use, should request it from

appropriate staff at its main or branch office. The 10-

digit number is used on all applications for FHA-insured

loans and on all claims. If the number cannot be obtained

from other mortgagee staff, call Bob Harrigan, at (202)

755-0316. Without this identifying number, a mortgagee\'s

entire report is rejected by the system.

2\. FHA Case Number (First Digits), Section B. The first 9

numbers of 12-digit FHA Case Numbers have been placed

incorrectly in their field (Columns 23-32) by some

mortgagees. They must be entered beginning at the left

margin of their field, Column 23, or the system enters an

erroneous zero in the empty column. Since the first 3

digits of 12 and 13-digit case numbers are the HUD Field

Office Code, an erroneous zero in Column 23 results in an

invalid or incorrect Field Office designation. This means

that the entire case number is invalid and rejected, or it

appears with an incorrect case number under the

jurisdiction of an incorrect Field Office.

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3\. Status of Mortgage, Section M. Some mortgagees are not

reporting the status of each delinquent loan by using one

of the 9 codes, A through I, listed in the instructions for

Column 119 of Section M. The Regulations require a status

update and HUD needs the information for our oversight of

loans. Without a status code, the entire loan record

submitted is rejected by HUD\'s system.

In addition to data loss resulting from errors in these

three critical elements, data which is not submitted on time

cannot be entered into the system and is, therefore, missing

from the output reports and analysis for the month reported.

OTHER COMMON ERRORS. When errors are detected for the data

elements below, HUD\'s system does not reject the record, but

data fields are incomplete or inaccurate, and complete

tabulations cannot be made.

1\. Missing Social Security Numbers, Section D and E. Lenders

must continue their efforts to provide social security

numbers of mortgagor and co-mortgagor for each loan through

search of available records and direct contact with

mortgagors. In addition, accuracy is extremely important;

it appears some lenders are providing incorrect numbers.

These numbers are of critical importance to our credit

alert system, and are required for credit bureau reporting

and payment of claims, also.

2\. FHA Case Number (Last Digits), Section B. The last 3-

digits of FHA Case Numbers have been reported incorrectly

by some mortgagees. They report, in error, the Section of

the Act rather than the Section of the Act ADP Code in

columns 33-35, the suffix field of the FHA Case Number.

For example, code 203 is only 1 of about 70 possible ADP

codes which represent mortgages insured pursuant to Section

203 of the National Housing Act. We question the accuracy

of a mortgagee\'s reporting when its entire portfolio of

delinquent leans is reported with case numbers ending in

203, especially when there are dozens of cases. We need

the Section of the Act ADP Code to provide a specific

description of the type of mortgage insured by HUD.

The correct FHA Case Number for each loan is recorded in

the upper left corner of the Mortgage Insurance Certificate

for that loan. The last 3-digits of that number are the

Section of the Act ADP Code.

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3\. Zip Code Entered Incorrectly, Section J. The 5-digit zip

code must be entered beginning at the left margin of the 6-

digit field provided. An extra zero must not be entered at

the beginning of the zip code though it may be used in the

last space of the field. Accurate zip codes are essential

for HUD\'s output reports organized by zip code.

4\. Missing Date of First Payment, Section K. Case records

should be examined for the date of first payment due under

the original mortgage. Only if it is not available, enter

the closest substitute such as the closing date or the

endorsement date which appears on the Mortgage Insurance

Certificate.

5\. Date Format. All dates must be reported in the format

MMYY. For example, an action occurring in July 1987 must be

reported as 0787. Data is not edited before it is

keypunched, and must be submitted in proper format.

6\. Automated Entry. The magnetic tape blocking specifications

were not followed by some mortgagees. We have modified our

system to accept tapes blocked from 1 to 128 records.

Therefore, mortgagees may now provide data on magnetic tape

produced by personal computers if proper specifications are

followed: 9 track EBCDIC, unlabeled, blocked from 1 to 128

records; record length is 128 characters (positions 1-125

are data; positions 126-128 are filler). We encourage

reporting by magnetic tape if cost-effective for the

lender, and will return tapes to mortgagees after we enter

them in the system. Telephone inquiries about system

automation may be directed to Bill Shaw, Director, Housing

Information and Statistics Division, at (202) 755-6190.

HUD appreciates your efforts to comply with these reporting

requirements and anticipates that all mortgagees will rapidly

achieve a high quality of accurate, complete, and timely

reporting.

Sincerely yours,

Thomas T. Demery

Assistant Secretary