How does a lender know if a loan is eligible for an upfront mortgage insurance premium refund?

The Upfront Mortgage Insurance Premium (UFMIP) is not refundable, except in connection with the refinancing to a new FHA-insured mortgage. 
 
If the borrower is refinancing their current FHA-insured mortgage to another FHA-insured mortgage within 3 years, a refund credit is applied to reduce the amount of the UFMIP paid on the refinanced mortgage.  The refund schedule is provided in Handbook 4000.1 II.A.8.d.iv.
 
Lenders can determine if an insured loan is eligible for a partial refund of UFMIP by accessing the FHA Connection ''Refinance Credit Query'' function. Refinance authorization is automatically processed when ordering a case number and indicating the previous FHA case number. The refinance authorization information may be accessed or adjusted after case number issuance by accessing the ''Refinance Authorization'' function using the new case number.  

For additional information see Handbook 4000.1 II.A.2.e.i.(B) & II.A.8.d.iv. at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04625