Is the Selling or Purchasing Mortgagee responsible for MIP premiums when the mortgage is sold?

A Mortgage Sale is a transaction in which a Holder sells the Mortgage to another FHA-approved Mortgagee.
The Selling Mortgagee relinquishes all rights and obligations under the contract for mortgage insurance on the effective date of the sale.  The Selling Mortgagee remains responsible for Mortgage Insurance Premiums (MIP) until notice of the sale is received by HUD via FHA Connection (FHAC).

The Purchasing Mortgagee is the Mortgagee that purchases the Mortgage and thereby succeeds to all rights and obligations of the Selling Mortgagee under the contract for mortgage insurance. As of the effective date of the sale, the Purchasing Mortgagee becomes responsible for outstanding MIP obligations, regardless of the date of accrual, and must confirm that the details of the mortgage sale have been reported accurately.
 
The Selling Mortgagee must report the effective date of the sale of the Mortgage as the “Transfer Date” and update the mortgage record in FHAC within 15 Days of the date of the sale.
 
See policy in Handbook 4000.1, Section III.A.1.b.ii. 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-05210