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 ===========================================================================