www.hudclips.org 


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

June 28, 1994
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 94-31
     TO:  ALL APPROVED MORTGAGEES
     SUBJECT:  Single Family Up-Front Mortgage Insurance Premium
                 (UFMIP) Processing Problems
 
          The Department of Housing and Urban Development (HUD)
     regrets the delays in the processing of lender corrections for
     remittance of the UFMIP.  A large backlog has been building for
     over a year, resulting from the tremendous increase in the number
     of lender correction requests being received.  The large volume
     of requests combined with intermittent automated systems problems
     and tighter budgetary/staffing constraints agency-wide has
     greatly diminished the Department's capacity to constantly
     provide a timely response.
 
          Due to the resource limitations at HUD, a significant
     improvement in response time will probably not happen in the near
     future.  Your patience is appreciated while we work through the
     backlog with the available resources.  On new requests, please
     allow 120 days for response.  Your cooperation in refraining from
     sending duplicate requests whenever possible will significantly
     help keep the workflow moving smoothly.
 
          HOWEVER, HUD is making changes to help you immediately,
     while continuing long-range development to improve the UFMIP
     remittance process.
 
          This mortgagee letter provides the information on what HUD
     is doing and what you can do to reduce delays:
 
          o    Part I outlines the steps HUD is currently taking to
               provide immediate relief to lenders.
 
          o    Part II describes HUD's future plans to assist lenders.
 
          o    Part III provides detailed information on the steps
               which you can take to help HUD help you.
 
          o    Attachment A provides information on the most common
               errors and a format for submitting Lender Assistance
               Requests (LAR).
 
_____________________________________________________________________
                                                                 2
 
PART I:  WHAT HUD IS CURRENTLY DOING TO HELP YOU
 
1.   WAIVER OF SIX MONTHS OF PAYMENT RECORDS
 
     The HUD Field Offices will waive the requirement for six
months of payment records where the delay in endorsement is due
to a delay by HUD in correcting an UFMIP remittance problem.  The
lender must provide either a copy of the cancelled check or an
Automated Clearing House (ACH) receipt to show that premium was
paid in order to avoid providing a six month payment history.
 
2.   ADDITIONAL STAFFING SUPPORT
 
     In August 1993, the Telephone Service Center staff was
doubled to accommodate the growing number of phone requests.
Also, HUD has recently obtained additional staff support to
assist your representative in processing correction requests
received via courier, mail or fax.
 
3.   REMITTANCE VIA ACH PROCESS
 
     The recent requirement for the transmission of funds via ACH
has eliminated the problem of data entry errors at the HUD
Lockbox and greatly decreased the time for the remittance
process.  The Department is continuing to make improvements
within the ACH process, making the program more user friendly
(while adding edits to prevent receipt of erroneous data) and
providing additional functions, such as:  (1) the recent
enhancement providing capacity to change data previously
submitted on refinances and, (2) the change in development to
allow the remittance of late charges and interest only.
 
4.   ENHANCEMENTS TO ECHO COMMUNICATION NETWORK
 
     Additional correction functions are being added to the OTMIP
software available through ECHO, allowing the mortgagee the
ability to make many of their own corrections.
 
5.   ON-SITE LENDER TRAINING
 
     HUD is conducting on-site, one-on-one conferences and
training for lenders at the HUD Headquarters in Washington, DC.
 
_____________________________________________________________________
                                                                 3
 
Conferences are provided by appointment.  If you wish more
information on the conferences or wish to set up an appointment,
please send your request to:
 
          Department of Housing and Urban Development
          Single Family Insurance Operations Division
          Room 2246
          451 7th Street, SW
          Washington, DC  20410
          Attn:  LENDER CONFERENCE COORDINATOR
 
PART II:  FUTURE PLANS
 
1.   OFF-SITE LENDER TRAINING
 
     The Department will be expanding its lender training to
include off-site training at several locations outside the
Washington, DC, area.  Information on these sessions will be
provided when firm dates and locations have been set up.
Currently, the projected timeframe for the training is summer,
1994.
 
2.   PUBLIC INQUIRY COMMUNICATION SUBSYSTEM (PICS)
 
     The Department is currently developing a comprehensive
correspondence control and response system which will allow HUD
to track your LAR and respond more quickly.  The system will also
provide data regarding the frequency and types of errors being
created to allow the Department to target needed training for
lenders.
 
3.   ELECTRONIC DATA INTERCHANGE
 
     HUD is developing an electronic communications network which
will provide lenders the capability to transmit data for premiums
remittance and corrections, mortgage record changes, mortgage
terminations and other related functions.
 
4.   FIELD OFFICE PROCESSING
 
     HUD will be implementing a pilot project which will provide
the HUD Field Offices with the capability to process lender
corrections for the premiums remittance process.
 
_____________________________________________________________________
 
                                                                 4
 
5.   NEW DATA PROCESSING SYSTEMS
 
     The Department is currently developing a new long term data
processing system which will replace the current system and allow
HUD to more efficiently process your requests for corrections.
 
PART III:  HOW YOU CAN HELP HUD TO HELP YOU
 
1.   DO NOT SEND A REFINANCE NETTING TRANSACTION AS A PURCHASE
 
     Unless COMPLETE and ACCURATE information is supplied, the
transmission will not result in a correct Statement of Account
(SOA).  ALSO, if you did not obtain a netting authorization number
or if the number expires, it is possible that the original case
will terminate and the refinance credit amount will be refunded
directly to the mortgagor.
 
2.   DO NOT SUBMIT REMITTANCES FOR REFINANCE TRANSACTIONS WITHOUT
     NETTING AS A PURCHASE
 
     If there is no refinance credit remaining on the original
FHA case to apply to the new case, the remittance data should be
completed the same as for a purchase.  If using ACH, follow
instructions for "refis with no old case netting".  If using the
form HUD-27001, Transmittal for Payment of One-Time Mortgage
Insurance Premium, follow the instructions on the form (latest
version dated 1/94) for "Refinance without netting".
 
3.   AVOID THE MOST COMMON ERRORS
 
     Verify all data when completing MIP remittance data on ACH
screens or on the HUD-27001 (see Attachment A).
 
4.   USE ACH TO TRANSMIT MIP
 
     Use of ACH gives you complete control of the data entry for
your remittances.  VERIFY that all data is correct before you
transmit.
 
_____________________________________________________________________
                                                                 5
 
5.   MAKE YOUR OWN MIP CORRECTIONS
 
     Most non-monetary corrections can be made through ACH and
ECHO/Telemail.  Use either the ACH Service or ECHO (utilizing
OTMIP software) and you will receive your SOA within 24 to 48
hours.
 
6.   USE THE LAR FORMAT WHEN SENDING REQUESTS THROUGH THE MAIL
 
     Requests received in this format will expedite the
Department's processing of your request.  Please indicate IN THE
SPACE PROVIDED if it is a first, second or third request.
Duplicate requests cause delays in HUDs response (see Attachment
B).  Fax requests for corrections ONLY when requested to do so by
a HUD representative.
 
7.   CONTINUE TO ENSURE PROPER TRAINING OF YOUR STAFF.
 
     Please establish an ongoing training program for staff that
are responsible for the remittance of MIPs.  Your rate of
accuracy will greatly increase with knowledgeable, fully trained
staff.
 
8.   QUALITY CONTROL
 
     Each mortgagee should establish quality controls to ensure
the accuracy of transmittal data.
 
     WITH YOUR SUPPORT, HUD WILL BE ABLE TO SERVE YOU MORE
EFFICIENTLY!
 
Very sincerely yours,
 

Nicolas P. Retsinas
Assistant Secretary for Housing
- Federal Housing Commissioner
 
Attachments
 
_____________________________________________________________________
 
ATTACHMENT A
 
                              MOST COMMON ERRORS
 
===========================================================================
 
     Error Type                    Result
 
===========================================================================
 
     PURCHASE
 
REMITTING MORTGAGEE           Non-receipt of SOA.
NUMBER
 
FHA CASE NUMBER               MIP may be credited to incorrect case.
                              A Duplicate record may be created.
 
CLOSING DATE                  Extended processing time if OTMIP is
(Remitted prior to            received prior to closing date.
closing or incorrect)         Zero Mortgage amount calculated if date is
                              omitted.
 
TERM OF MORTGAGE              Incorrect mortgage amount calculation on SOA.
 
PORTION FINANCED              Will not reconcile with CHUMS.
 
     REFI DATA
 
AMOUNT OF OTMIP PAID          All incorrect refi information will result in
                              (E) indicators on your SOA, as well as
PERIOD OF INSURANCE           extended processing time.  (All Refi data
                              should be verified through a Netting
TERM OF MORTGAGE              Authorization prior to submission of MIP.)
 
ORIGINAL MTG AMOUNT
 
EARNED MIP FACTOR
 
OTMIP EARNED BY HUD
 
OTMIP REFUND CREDIT           Mortgage amount will be incorrect.
 
EXCESS OTMIP REFUND           Residual refund will be generated to
                              mortgagor for incorrect amount.
===========================================================================
 
_____________________________________________________________________
 
===========================================================================
 
               UP-FRONT MORTGAGE INSURANCE PREMIUM (UFMIP)
                    LENDER ASSISTANCE REQUEST (LAR)
 
(A separate LAR is required for each FHA case number to receive a corrected
               UFMIP Statement of Account)
 
                                ________________
                                M  M  D  D  Y  Y
 
                                ____________________________
                                MORTGAGEE ID NUMBER
 
                                ____________________________
                                FHA CASE NUMBER
 
Contact Person: _________________
Telephone No.: (_ _ _) _ _ _ - _ _ _ _
 
___________________________________________________________________________
 
CIRCLE TYPE OF LOAN:      REFINANCE           PURCHASE
 
Circle the letter below for the type of assistance you are requesting.
DO NOT send additional information unless it is noted with the type of
assistance you are requesting.
 
A.  SOA correction.  The SOA IS ATTACHED WITH THE CORRECTION NOTED.
 
B.  Non-Receipt of a SOA and funds were sent to Lockbox.  THE FOLLOWING
    ADDITIONAL INFORMATION IS ATTACHED:
 
     1.  Correctly Completed HUD 27001
     2.  Front and back of the cancelled check
 
C.  Non-Receipt of a SOA and funds were transmitted via ACH.  A COPY OF THE
    ACH TRANSMISSION WITH VERIFICATION CODE IS ATTACHED.  The
    transmission date is __/__/__.
 
D.  Non-Receipt of a SOA and refund credit is greater than or equal to
    premium due.  A CORRECTLY COMPLETED 27001 IS ATTACHED.
 
E.  OTHER SOA problems not noted above:
 
___________________________________________________________________________
 
USE OF THIS LENDER ASSISTANCE REQUEST WILL EXPEDITE THE
PROCESSING OF YOUR SOA CORRECTIONS
===========================================================================