Who is responsible for MIP payments on a Section 222 Mortgage?

Authority for Mortgages insured under Section 222 of the National Housing Act was repealed on July 30, 2008. The following policies apply for existing Section 222 Mortgages, for which Mortgage Insurance Premiums (MIP) are paid by the servicemember-Borrower’s branch of the military service until the servicemember’s eligibility is terminated.
The military branch is responsible for payment of MIP on a Section 222 Mortgage when the Borrower is:
  • a certified servicemember at the time of application; and
  • the owner of the Property at the time of FHA endorsement.
HUD does not require the Mortgagee to collect MIP from the Borrower or to remit premiums to FHA until advised by FHA that the service branch will no longer pay the premiums.
When FHA is notified that the mortgaged Property has been sold or that the servicemember has been discharged, retired, or has died, FHA will:
  • request confirmation from the service branch of the termination of MIP; and
  • notify the Mortgagee to begin collecting MIP from the servicemember-Borrower.
The service branch is responsible for determining continued eligibility of servicemember-Borrowers. If a servicemember-Borrower dies while on Active Duty and is survived by a
spouse, the service branch will be responsible for the following:
  • continuing to pay MIP on the Mortgage until two years after the servicemember’s death or until the spouse disposes of the Property, whichever occurs first; 
  • notifying FHA when eligibility terminates; and
  • paying MIP until confirmation of the termination is received by the FHA Comptroller. FHA will notify the Mortgagee of its responsibility for payment of the MIP.

For policy information see Handbook 4000.1 Section III.A.3.f. 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-04668